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Survel"llance
<br /> Rati*ng
<br /> Actl*ons
<br /> Mi*dwest Issuers
<br /> Standard & Poor's Ratings Services has raised the ratings on 22 school districts and municipalities in Illinois,
<br /> Indiana, Michigan,Minnesota,Missouri, and Ohio,and also affirmed the ratings on 15 issuers in Illinois,Indiana,
<br /> Michigan,and Ohio. In all cases,the outlook is stable. The rating actions were part of our practice of regularly
<br /> surveilling existing ratings,and they reflect criteria we published in 2008 on the role of size,location, and
<br /> quantitative factors in our opinions on general obligation and appropriation debt.
<br /> Although size and location have weighed heavily on many of our ratings in the past,in our view,these credits can,
<br /> and often do,exhibit many of the same economic and financial strengths as their larger counterparts. The key to a
<br /> higher rating,in our opinion,is achieving a balance between location and economic opportunity that helps maintain
<br /> financial stability (for more information, see "Does Bigger Always Mean Better? Sizing Up The Impact Of Size On
<br /> Municipal Ratings," published April 22, 2008, on RatingsDirect). -
<br /> Similarly,while in our view location remains an important credit factor in a rating,we do not believe it is the
<br /> overriding factor. Although we think that limited access to a metropolitan area can restrict access to a larger
<br /> employment base,in our view, it does not necessarily translate into an economy that is less stable. In our opinion,
<br /> striking a balance between location and economic opportunity is critical to maintaining financial stability, and that
<br /> can happen either near a major metropolitan area, or in a remote county (see "Location, Location, Location:What
<br /> Does It Mean For My Community's Rating?" published April 22,2008, on RatingsDirect).
<br /> Ratings on the issuers listed in this article reflect our view of the potential economic impact from the local,state, and
<br /> national economies. All of the issuers reviewed in this report are in states that have faced recent financial and/or
<br /> economic difficulties, and some of those difficulties have translated to reduced revenue distributions to local
<br /> governments. We believe this is particularly important for issuers,most notably school districts,which receive a
<br /> significant portion of their funding from per pupil revenues distributed by the state.To affirm or adjust ratings
<br /> upward under these circumstances, Standard &Poor's assesses the impact of statewide financial or economic
<br /> difficulties on these local issuers,particularly if those difficulties result in reduced revenues for the issuer.
<br /> Management's response, or lack thereof,is particularly important to our analysis. Those issuers seeing upgrades
<br /> have,in our opinion,maintained structural balance or clearly communicated to us what they have done, or will do,
<br /> to regain structural balance. Issuers being affirmed may not, in our view,currently show the financial or economic
<br /> strength to warrant an increase, but have been able to consistently meet the financial metrics associated with their
<br /> rating category.
<br /> Standard & Poor's has communicated with each of the issuers in this article regarding potential revenue
<br /> fluctuations--both statewide and local--and believes they should be able to maintain a stable financial position
<br /> commensurate with their new rating level. Although we believe there remains significant uncertainty regarding any
<br /> potentially positive or negative economic changes that might occur in the Midwest in the next several years,
<br /> Standard & Poor's expects that most of the issuers discussed in this article will likely be able to withstand any of
<br /> these changes without what we consider a major negative impact on their financial position or credit rating.
<br /> Standard & Poor's will continue to monitor our municipal ratings and make rating adjustments, either up or down,
<br /> as we consider appropriate.
<br /> Standard & Poor's I RatingsDirect on the Global Credit Portal March 15,2010 2
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