S&P Cuts Ratings on 11000 Muni Issues

[Purveyor]

Source: WSJ


By Michael Aneiro
Of DOW JONES NEWSWIRES


NEW YORK (Dow Jones)--The municipal bond market weakened Tuesday after Standard and Poor's downgraded more than 11,000 public finance issues to keep them in line with its newly lowered rating on federal government debt.

S&P said it had lowered to double-A plus from triple-A the ratings on certain public finance debt issues linked to the federal government, matching the downgrade it applied to U.S. government debt last Friday.

While the number of issues affected is large, it covers less than 1% of the estimated 1.2 million outstanding debt issues in the $2.9 trillion municipal bond market.

The downgrades applied to a variety of debt linked to the federal government, including pre-refunded bonds backed by escrowed Treasury notes, public finance housing authority issuers, and public finance debt issues with mortgage insurance from the Federal Housing Administration and mortgage revenue invested in short-term instruments guaranteed by the U.S. government.

Read more: http://online.wsj.com/article/SB10001424053111904140604576498544285815056.html?mod=googlenews_wsj

[physioex]

1. Bunch of damn geniuses.....

Where were they the last......ummmmm say decade?

[Dawson Leery]

2. S&P needs to be investigated.

S&P rating junk CDO's and subprime mortgages as AAA.

[Purveyor]

3. I believe I read somewhere that the Senate is going to do just that. eom

[maxsolomon]

6. i'm sure S&P are quaking in fear at that prospect

a senate investigation!

[Purveyor]

8. Right. The Senate might even make an exception and force them to testify under oath. /s eom

[Cool Logic]

11. I guess they didn't like hearing the truth for a number of reasons...

Reasons.

[ProfessionalLeftist]

4. Friends of the BFEE and they want Mittens as President

Can't figure why they'd be trying (along with the Republicans/Tealiban) to destroy the economy. :dunce: :sarcasm:

Of course they did call out Republican obstinance in their reasoning but nonetheless, one has to wonder at this point, when they're the ONLY ratings firm doing this thus far, what their political motives are.

[davidwparker]

5. Did anybody here Stephanie Miller's show today. Chris

had mentioned a tie from S&P back to the Mitt Romney campaign.

I agree with a previous post. S&P apparently has time to be deposed by the DOJ for fraud dealing with toxic loans.

[Historic NY]

7. That ought to sink any job creation using stimulis and other sources....

municipal bonds help finance local government projects from building to water lines.

[izquierdista]

9. The REAL reason

The downgrade of the US was only the preliminary. This is where the money is to be made, with more volatility and wider spreads.

[KamaAina]

10. I was afraid of this. A random Facebooker mentioned the "sovereign ceiling".

That is, no debt can be rated higher than that of an entity that it is a part of: So in effect, ALL public debt that was rated AAA has been downgraded. :scared:

Fortunately, California has been hovering around junk-bond status for quite some time now. And we know how S&P loves 'em some junk bonds. :eyes: