This is a nice thing to wake up to…
At least 7,000 top-rated municipal credits would have their ratings cut if the U.S. government loses its Aaa grade, Moody’s Investors Service said.
An “automatic” downgrade affecting $130 billion in municipal debt directly linked to the U.S. would occur if the federal level is reduced, Moody’s said yesterday in a report. Additionally, top-rated securities with no direct links to the national government will be reviewed for similar action.
Nothing like the threat of a massive bond market cascade to head into the weekend thinking about. The most demented thing about this prospect is the fact that it will inordinately affect the retirees and near-retirees that make up such a large part of the muni market.
The beat goes on…