Moody’s Bond Rating Changes Could Affect Counties

Moody’s Investor Service, one of the three major ratings agencies evaluating municipal bond issuances from counties and other governments, has announced revisions to its standards for ratings.

From coverage in Governing magazine, the largest effects will be felt by jurisdictions facing large pension liabilities:

Under the new rules, Moody’s is revamping the way it analyzes and adjusts pension liabilities as part of its credit analysis of state and local governments. These changes reflect a view that pension obligations are “a significant source of credit pressure for governments and warrant a more conservative view of the potential size of the obligations,” according to a press release announcing the new rules. As a result of the new approach, Moody’s immediately placed on review the general obligation bonds for 29 municipalities that have large adjusted net pension liabilities. Those bonds now face a possible downgrade.

The Governing article mentions several states and cities as facing re-evaluation, but none in Maryland. Read the full article here.

Michael Sanderson

Executive Director Maryland Association of Counties