Moody's mulls rating change for muni bonds

The firm is responding to criticism that ratings firms underrate municipal debt relative to corporate bonds.
MAR 21, 2008
By  Bloomberg
Moody's Investor Service plans to make changes to its rating practices for municipal bonds. Responding to criticism that ratings firms underrate municipal debt relative to corporate bonds, the New York-based ratings agency said it was considering changes to its ratings system. Under the proposal, cities and states can request a corporate-scale rating for their tax-exempt municipal bonds in addition to a standard municipal rating. Moody's is seeking comments on the change, which it said could go into effect in May. The move comes a several weeks after and 10 other states called on the country's three biggest ratings firms to use the same scale to evaluate municipal and corporate debt, ending a difference that has persisted for decades, according to The New York Times. Municipalities say the difference in ratings costs taxpayers because they have to buy insurance on bonds that are not rated triple-A, the highest grade assigned by the firms, according to the report. From 1970 to 2006, lower-rated, single-A municipal bonds defaulted 17 times less frequently than triple-A corporate debt, according to Moody's.

Latest News

JPMorgan tells fintech firms to start paying for customer data
JPMorgan tells fintech firms to start paying for customer data

The move to charge data aggregators fees totaling hundreds of millions of dollars threatens to upend business models across the industry.

FINRA snapshot shows concentration in largest firms, coastal states
FINRA snapshot shows concentration in largest firms, coastal states

The latest snapshot report reveals large firms overwhelmingly account for branches and registrants as trend of net exits from FINRA continues.

Why advisors to divorcing couples shouldn't bet on who'll stay
Why advisors to divorcing couples shouldn't bet on who'll stay

Siding with the primary contact in a marriage might make sense at first, but having both parties' interests at heart could open a better way forward.

SEC spanks closed Osaic RIA for conflicts, over-charging clients on alternatives
SEC spanks closed Osaic RIA for conflicts, over-charging clients on alternatives

With more than $13 billion in assets, American Portfolios Advisors closed last October.

William Blair taps former Raymond James executive to lead investment management business
William Blair taps former Raymond James executive to lead investment management business

Robert D. Kendall brings decades of experience, including roles at DWS Americas and a former investment unit within Morgan Stanley, as he steps into a global leadership position.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.