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Encyclopedia of Municipal Bonds: A Reference Guide to Market Events, Structures, Dynamics, and Investment Knowledge by Joe Mysak

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A

ability to pay

Municipal bond analysts make two assessments when considering a government’s creditworthiness: its ability to pay its debts and its willingness to pay. Ability refers to an issuer’s relative financial condition. If a municipality is open for business and can levy fees and taxes, investors expect it to pay its bills and to repay its loans, even if it has to raise those taxes and fees to do so. Willingness to pay is far more difficult to judge, as it deals with political will at a point in time.

See also Orange County, California; willingness to pay.

acceleration

A provision, normally present in a bond indenture agreement, mortgage, or other contract, that the unpaid balance is to become due and payable if specified events of ...

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