Moody's public finance downgrades continue to outpace upgrades

July 26 Fri Jul 26, 2013 11:00am EDT

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July 26 (Reuters) - Leading rating agency Moody's Investors Service downgraded 219 public finance ratings in the second quarter, 83 percent of the rating changes it made, and it expects the high pace to continue through the year, it said in a special report on Friday.

In the second quarter, the par amount of the debt downgraded more than tripled to $92 billion from $27 billion in the first quarter, largely due to the ratings cut on $32 billion of Illinois general obligation and sales tax bonds. The state's ongoing pension funding battles have raised concerns about its credit quality in the municipal bond market.

The agency said that debt issued by Detroit and the city's water and sewer agency accounted for nearly half of the $19.9 billion par amount of local government downgrades.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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