KBRA assigns a rating of AA+ to The Metropolitan Government of Nashville and Davidson County, TN (Metro) General Obligation Improvement Bonds (“the Bonds”). The Outlook is Stable.

The assigned general obligation bond rating reflects the Metropolitan Government of Nashville and Davidson County’s (the "Metropolitan Government", “Metro” or “City”) favorable socioeconomic and demographic trends, strong institutional practices, moderate level of debt amortized at an above-average rate, and well-maintained financial operations distinguished by recently augmented reserves which were further buttressed by a strengthened reserve policy.

The Series 2024 Bonds are direct obligations of the Metropolitan Government, payable from unlimited ad valorem taxes to be levied on all taxable property within the Metropolitan Government without limitation as to rate or amount. KBRA understands that the Bonds are being issued to: (i) finance the costs of various capital improvement projects of the Metropolitan Government as authorized pursuant to the Initial Resolutions; (ii) retire a portion of the principal amount of the Metropolitan Government’s outstanding general obligation commercial paper bond anticipation notes at maturity; and (iii) pay certain costs of issuance related to the Bonds.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

• Metro’s broad and diverse economic base that features governmental, commercial, institutional, healthcare and tourism-based activity, and sizable property tax base.
• Well-maintained financial operations, strengthened through recent operating surpluses and adoption of a more restrictive fund balance policy.
• Adopted financial and debt policies that provide a framework for effective management.

Credit Challenges

• Presence of contingent liabilities related to debt issued by Metro-controlled authorities.
• Ongoing operating subsidies to NGH.

Rating Sensitivities

For Upgrade

• Maintenance of financial reserves while addressing identified capital needs.
• Elimination of subsidy to the Metro-owned Nashville General Hospital, which KBRA presently views as unlikely.

For Downgrade

• Significant unplanned draws on accumulated reserves.
• Failure to adhere to adopted policies and procedures.

To access rating and relevant documents, click here.

Methodologies

• Public Finance: U.S. Local Government General Obligation Rating Methodology
• ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1006194

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