Aug 9 Credit rating downgrades of U.S. municipal
bond issuers hit a 10-year high in the second quarter, Moody's
Investors Service reported on Thursday.
Stressed budgets and weaker liquidity, particularly in
cities and school districts, led to rating cuts, the Wall Street
"About half of the downgrades in the quarter affected the
debt of cities and school districts with many of these in
California and Michigan," said Moody's analyst Dan Steed, in a
In the second quarter, Moody's dropped the ratings for
Detroit, Michigan's biggest city, affecting $6.9 billion of
debt, while ratings for Stockton, California, were cut on
expectations of the city's municipal bankruptcy filing. Stockton
formally filed on June 28.
Moody's also downgraded a slew of ratings on $11.6 billion
of tax allocation bonds issued by California Redevelopment
The number of downgrades in the quarter totaled 290
affecting $61.3 billion of debt and the ratio of downgrades to
upgrades was 4.4 to 1. On a par amount basis, downgrades
exceeded upgrades by 7.2 times, down from 14.2 times in the
first quarter, Moody's said in a report.
For the first half of 2012, there were 117 upgrades
affecting $14.2 billion of debt and 502 downgrades affecting
$142 billion of debt, according to the report. That compares
with 125 upgrades affecting $13.2 billion of debt and 518
downgrades, affecting $193.5 billion of debt during the same
period in 2011.