On Sept. 9, 2024, S&P Global Ratings published its updated methodology for rating U.S. governments. In this FAQ, we provide additional context about the criteria, including the scope, expected rating impact and timelines, and changes from prior criteria. For the full framework, see "Methodology For Rating U.S. Governments."

FREQUENTLY ASKED QUESTIONS

What is the scope of the new criteria?

The criteria apply to U.S. states, counties, municipalities, school districts, and special government districts. The criteria don't apply to governments outside the U.S. or to governmental entities in the scope of other issuer credit rating criteria, such as:

• Methodology And Assumptions: Rating Unlimited Property Tax Basic Infrastructure Districts, March 17, 2009;
• U.S. Municipal Water, Sewer, And Solid Waste Utilities: Methodology And Assumptions, April 14, 2022;
• U.S. Municipal Retail Electric And Gas Utilities: Methodology And Assumptions, Sept. 27, 2018;
• Global Not-For-Profit Transportation Infrastructure Enterprises: Methodologies And Assumptions, Nov. 2, 2020;
• U.S. And Canadian Not-For-Profit Acute Care Health Care Organizations, March 19, 2018;
• Global Not-For-Profit Education Providers, April 24, 2023; and
• U.S. Public Finance Charter Schools: Methodology And Assumptions, Jan. 3, 2017.

What is the expected ratings impact?

Across all ratings in scope of these criteria, we expect more than 95% will remain unchanged. Specifically:

• For U.S. states and territories, we expect all ratings will remain unchanged.
• Approximately 2% of county ratings could change, generally by one notch higher or lower.
• For municipality ratings, approximately 4% could change, generally by one notch higher or lower.
• About 5% of school district ratings could change, generally by one notch higher or lower.
• For special district ratings, approximately 5% could change, generally by one notch higher or lower.

How can I tell if a specific rating will change under the new criteria?

We've published a list of issuers with credit ratings that we have placed Under Criteria Observation (see "Ratings On 436 Issuers Placed Under Criteria Observation Following Publication Of New U.S. Government Methodology"). This list represents the subset of issuers within the scope of the new criteria with credit ratings that could be affected by the change in criteria.

A UCO placement doesn't change the credit rating, nor does it indicate the direction of a possible rating change resulting from the application of the new methodology. The UCO label will remain on these ratings until the conclusion of our reviews of these credits under the new criteria, at which time we could affirm the ratings or change them.

The UCO label also appears on the individual issuer and transaction pages of S&P Global Ratings' online credit rating products and on the free website: spglobal.com/ratings.

When will S&P Global Ratings review the ratings under the new criteria?

We'll review the UCO ratings within six months. Ratings without the UCO label will be reviewed in the course of our regular annual surveillance, if there is a material credit event, or in the event of new issuance. We cannot accept any requests for expedited reviews of outstanding ratings.

How will I know when a specific rating has been reviewed under the new criteria?

The date on which a credit rating was last formally reviewed (within a 12-month period) appears below the credit rating and outlook on the individual issuer and transaction pages of S&P Global Ratings' online credit rating products and on our free website. If the Last Review date is later than the release date of the new U.S. government methodology, the rating has been reviewed under the new methodology. For ratings that were placed on UCO, once they're reviewed under the new criteria, the Last Review date will also be updated, and the UCO identifier will be removed.

Will management meetings change?

The fundamental credit factors we evaluate in our rating analysis remain largely unchanged, and we expect the form and substance of rating meetings to reflect that continuity.

What was changed in the new criteria?

The criteria adopt a single scored framework for all U.S. governments. The scored credit factors include the government's individual credit profile (ICP) and are largely the same as existing criteria, but the criteria adopt a common set of weights across all U.S. governments. The new framework separates the institutional framework (IF) assessment from the ICP, giving the IF greater prominence in the criteria. These changes align closely with the framework in our "Methodology For Rating Local And Regional Governments Outside Of The U.S.," July 15, 2019, improving comparability of our analysis globally. For more details on how our analysis is changing and why, see "Credit FAQ: An Overview Of S&P Global Ratings' Proposed Methodology For Rating U.S. Governments," Jan. 11, 2024.

What will likely be the key drivers of any rating actions due to the application of the new criteria?

For schools and special districts, expected changes are primarily due to the movement to scored criteria from non-scored and the adoption of a methodology that assesses the IF and ICP in a consistent manner. For counties and municipalities, expected changes are primarily due to changes in the factor weightings, with less emphasis on economic factors and more emphasis on debt and liabilities than in the former criteria. Rating changes may occur due to shifts in key credit factors that are unrelated to the adoption the new criteria.

How are the final criteria different from the proposed criteria?

We've outlined the comments received on proposed criteria and our responses, including certain changes made before publishing final criteria, in the RFC process summary.