Definition of Net Debt to Estimated Valuation

A ratio comparing the net value of a municipal bond issued to the approximated industry price of the property secured by debts.

Brief Explanation of Net Debt to Estimated Valuation

This ratio can differ significantly from a municipal bond’s net debts to evaluated assessment if real-estate prices for the town’s holdings incur huge increases or decreases. One of the factors that figure out the standard of a municipal bond problem is the reduced an organization’s debts are relative to the approximated industry price of its residence, the less dangerous its ties are deemed to be since there is less risk the government would not have the aptitude to finance repayment of the bond problem. A higher ratio may indicate a situation in which the sale of the underlying assets may not be sufficient to pay off your debts. It is often useful to compare the net debts to approximated assessment to the net debts to evaluated assessment for an entity, especially when the housing companies are volatile and the value of the town’s holdings can experience huge changes. This ratio is one of the elements used to figure out the standard of a municipal bond.