Monday, August 13, 2012

Trouble in Municipal Bonds?

The municipal bond market has been a strong haven for investors all year long - which makes it more surprising that so many cities appear to be running into financial troubles. Moody's Investor Service just announced that it had downgraded 290 municipal issuers during the second quarter of this year, which is the most downgrades it has had in any one quarter since 2000.

Moody's downgraded 4.4 municipal issuers for every one it upgraded. Most of those affected were city governments and school districts. All told, it was the 14th consecutive quarter in which Moody's announced more downgrades than upgrades.

It's not just small places that have had financial issues, either. Stockton, California, declared bankruptcy on June 28, and Detroit is seeking to avoid a state takeover of its finances. California and Michigan were the states with the most municipalities that had been downgraded. 


No comments:

Post a Comment