Williamson County Commissioners Court banned the use of capital appreciation bonds Nov. 12 in order to protect its bond ratings.

Commissioner Cynthia Long said that following the passing of two bond packages totaling $315 million—which were not CABs—on Nov. 5, it was the responsibility of the commissioners court to ensure the county maintains its AAA bond ratings from both Standard & Poor and Fitch Ratings bond agencies.

"Williamson County sells general obligation bonds or certificates of obligation," said County Public Information Officer Connie Watson. "Most have a 20-year term where the life of the asset exceeds the term of the debt. With a CAB, the life of the debt can exceed the life of the asset."

The primary feature of CABs is that both interest and principal payments are deferred until bond maturity, according to Fitch Ratings website.

"For rapidly growing areas, the primary appeal is that needed capital improvements can be funded immediately, but the repayment burden is shared with the larger future population," the website stated.

Williamson County has never issued new debt under a CAB, and County Auditor David Flores said Williamson County did not use the bonds because of the nature of the payback schedule.

"It's very volatile in an interest-changing environment, and costly because it's hard to predict," Flores said. "In some ways it can be very risky."