Municipal Bond Market Looking Toward “Reform”

The Philadelphia Business Todaysite has some interesting insight on the market for municipal bonds:

Starting next month, Moody’s Investors Service says it will “recalibrate” the way it rates states and towns, and the risks they won’t pay their bills.

Moody’s says the switch means “an upward shift for most state and local government long-term municipal ratings by up to three notches.”

Let’s say ratings on Philadelphia bonds rise three levels, from “BBB” to “A.” Under current conditions, that implies a drop in interest rates from about 5.5 percent to 4.7 percent.

This would make this year’s planned $145 million Philadelphia bond sale cheaper, by more than $1 million a year. Over time, the city’s $3 billion in taxpayer-backed debt would cost millions less, as a result of being refinanced or replaced at lower rates.

Read the full article here.

Michael Sanderson

Executive Director Maryland Association of Counties

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