S&P: Automatic U.S. spending cuts unlikely to hurt local issuers

NEW YORK Thu Feb 28, 2013 2:15pm EST

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NEW YORK Feb 28 (Reuters) - Standard & Poor's said on Thursday that the $85 billion in automatic spending cuts from the federal budget that could become reality from Friday may have only a minor negative impact for local governments.

The credit ratings agency said that most municipalities since the beginning of the recession have shown willingness to impose cutbacks in response to a weaker revenue environment.

"We expect them to be prepared for the possibility of sequestration," Standard & Poor's said in a statement.

"States and many local governments have been actively monitoring developments at the federal level, and we believe they have evaluated the potential effects of sequestration in their revenue forecasts and budgets," said S&P credit analyst Gabriel Petek.

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