A credit rating is an assessment of the creditworthiness of a borrower, which in the context of urban fiscal policy primarily refers to municipalities and their ability to repay borrowed funds. It evaluates the likelihood that the borrower will default on their debt obligations, impacting the interest rates they are offered and their access to capital markets. Higher credit ratings indicate lower risk, which can lead to lower borrowing costs for municipalities during the bond issuance process and influence recovery prospects in cases of municipal bankruptcy.
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