Merritt Research Services aggregates salient credit information by locating, obtaining, providing, and following an audit or fund contained in a Comprehensive Annual Financial Report (CAFR) that best represents the source of payment for currently outstanding municipal bonds.
Those efforts have established a universe of Credits (often referred to as obligors) in the Merritt data set. Merritt takes great care in establishing the association ("link") between an Issue or group of Issues associated with a given Credit.
Generally, specific bond issues are linked based on the revenues pledged for their repayment and the appropriate source of these revenues - typically, the borrower.
For Merritt Standard Credits, establishing this link is a fairly straightforward process. If a hospital is the borrower and its general revenues are pledged for the debt service on the bonds, we link the issue to the hospital and standardize the financials for that entity. Similarly, if a city is the borrower and the full faith, credit and taxing power is pledged for repayment, the bond is linked to the city, and the governmental activities and general fund for that city are standardized.
For bond issues where the pledged revenues are not representative of an entity as a whole being responsible for the repayment, we identify credits that best represent the stream of revenues that will pay the debt service on the bonds. For example, a bond payable solely from the proceeds of a sales and use tax collected by a county would be linked to a dedicated tax credit that represents the sale and use tax - not to the county credit. A bond payable from lease payments that are annually appropriated by a state legislature would ideally be linked to a fund that reports the appropriated revenues and the debt service payments on the bonds. If there is not a suitable fund, it would be linked to the state that makes the appropriations.
In all cases, credits are created and maintained to best represent the incoming pledged revenues and the outgoing debt service payments.