...Neutral to Negative Credit Impact: Fitch Ratings views the impact of pension obligation bonds (POBs) on an issuer's credit quality to range from neutral to negative in most situations. Fitch's rating on POBs reflects the underlying pledge to bondholders, rather than the use of proceeds for pensions. However, issuing POBs is linked to a wide range of factors that inform the issuer's credit and, thus, can affect the issuer's rating. POBs may affect a government's overall liability burden and financial flexibility and add investment risks relative to the situation before the issuance. Related factors, such as the issuer's underlying pension situation before and after POBs, are likewise important considerations. The rating on a POB issuer incorporates these varying (and often offsetting) contextual factors to assess the extent to which issuing POBs results in a net change in an issuer's risk profile relative to the assumptions informing the rating before the POB issuance. Substituting versus...
