7000 Muni Bonds at Risk of Automatic Downgrade

This is a nice thing to wake up to…

From Bloomberg:

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…

Source:

Moody’s Will Cut 7,000 Municipal Ratings If U.S. Debt Downgraded (Bloomberg)

Tags: $MUB

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