Feb 6 (Reuters) - The direct risks that U.S. municipal bond issuers face from European banks struggling through the Euro Zone's debt crisis appear "manageable," though it is a material issue for a small number of muni issuers, Moody's Investors Service said on Monday.
Forty-four billion dollars of outstanding variable-rate demand debt and commercial paper is backed by European banks. About $28 billion of outstanding guaranteed investment contracts and interest swaps have European banks as counterparties, Moody's said.
"Still, absent a dramatic intensification of the debt crisis and contagion to the U.S. economy and U.S. banks, Moody's contends that the direct risks associated with support facilities, GICs and derivatives provided by European banks are manageable and credit stress on municipal issuers will be episodic rather than systemic," the agency said. (Additional reporting by Caryn Trokie) (Reporting By Joan Gralla; Editing by Dan Grebler; )