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**Table 1 Credit Ratings of Municipal Bond Bank Bonds**

|**State Bond Bank**<sup>**26**</sup>|**Outstanding**<br>**Loans as of 2016**|**Moody’s**|**S&P**|**Fitch**|
|---|---|---|---|---|
|Alaska Municipal Bond Bank<br>Authority|$1.07 billion||AA|AA|
|Indiana Bond Bank|$419 million||AA||
|Maine Municipal Bond Bank|$910 million|AA2|AA+||
|Maryland Local Government<br>Infrastructure FinancingProgram|$120 million|AA2 /<br>AA3|||
|Michigan Finance Authority<sup>27</sup>|$4.6 billion|AA1|||
|New Hampshire Municipal Bond<br>Bank|$942 million|AA2|AA+||
|North Dakota Public Financing<br>Authority|$132 million||AA||
|Vermont Municipal Bond Bank|$534 million|AA2|AA+||
|Virginia Resources Authority<sup>28</sup>|$1.66 billion|AA2|AA||

_Source: Author’s compilation based on municipal bond bank websites and publicly-available bond documents from EMMA (http://emma.msrb.org/)_ The primary security for the payment of the municipal bond bank bonds is the obligation of municipal borrowers to make timely debt service payments to the municipal bond bank. The payment obligations of the municipal borrower are payable as a general obligation of the municipality which reflects the full faith and credit of the municipality, or secured by certain pledged revenues, taxes or other pledged assets.

Municipal bond banks may pursue legally enforceable remedies against a defaulting municipal borrower based on the terms of the loan agreement and the state’s legal framework. Many municipal bond banks have statutory authority to intercept state aid transfers payable to municipal governments if the latter should default on obligations to repay their loans.<sup>29</sup> Some states go further. For example, the Maine Municipal Bond Bank can seize the property of residents for debt payments. Additionally, the Maine Municipal Finance Board, a state agency, has the legal authority to exercise control over any municipality that experiences financial difficulty (Maine Municipal Bond Bank 2015).

Municipal bond banks are financially independent, as states generally do not provide guarantees of municipal bond bank debt, nor budget support for municipal bond bank operations. Most states do not

> 26 Ratings shown are for the most recent bond issue under the pooled financing program within the municipal bond bank, in the case that the municipal bond bank manages multiple programs such as SRFs.

> 27 Local Government Loan Program – offers low-interest loans based on the pooled sale of loans from the Michigan Finance Authority. Borrowers can pledge state aid, investment credit or bond insurance as security. The rating here is for the unlimited tax general obligation local project bonds.

> 28 Figures are for the state’s municipal pooled program, the Virginia Pooled Financing Program.

> 29 For example, municipal bond banks in the following states can intercept any state aid to municipalities in the event of municipal default on its loan to the municipal bond bank: Alaska, Maine, Maryland, New Hampshire, and Vermont. Municipal bond banks in the following states may intercept a certain portion of aid, or the aid relating to certain program: Indiana, Michigan, and Virginia. See Peterson 1997:9, updated based on the author’s research.