Alabama Capital Building
Bloomberg has quite a long article about the potential effects of the merging of the Moody’s corporate and municipal rating scales…
~~ ” Moody’s Investors Service is about to tell as many as 29,000 U.S. state and local government borrowers that they have higher credit ratings. That doesn’t mean taxpayers will enjoy lower borrowing costs anytime soon… ” ~~
Imagine almost 30,000 municipal units having their credit rating moved up… this is wonderful news…
The second point raised in the BBG lede related to reduced borrowing costs is a little more complicated…
~~ “… We have not witnessed any material tightening in the asset class as a result of the potential recalibration of muni ratings,” said Peter DeGroot, head of the municipal strategies group at New York-based Lehman…” ~~
Now the folks at Lehman have pretty tight control on muni pricing through their relantionship with the MuniCenter, other ATSs and OTC connections … but I wonder if spread relantionships are not following their normal course due to all the credit market disruptions… the large banks would normally have plenty of room on their balance sheet to carry muni inventories… and matrix pricing would smooth out spread relationships…
Maybe we just need to let credit markets settle down before we assess how effective normalizing the muni and corp rating scales has been… hard to gauge how long it will take… patience all…
Post a Comment