Moody’s: Q2 Public Finance Downgrades Highest in Ten Years
Moody’s Investors Service said in its latest quarterly report that the second quarter of 2012 had the highest quarterly number of U.S. public finance downgrades of the last ten years as significant financial pressure was present across all public finance sectors.
“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, author of the report, “U.S. Public Finance Rating Revisions for Q2 2012.”
“Because the number of upgrades also increased, the 4.4 to 1 ratio of downgrades to upgrades was only slightly higher than the prior quarter,” said Steed. On the basis of par amounts, downgrades exceeded upgrades by 7.2 times, down from 14.2 in the first quarter.
“Stressed budgets and weakening liquidity are the predominant factors driving down credit ratings among issuers,” said Steed.
Sectors covered in the report include state and state-related entities, local governments, not-for-profit hospitals, higher education and not-for-profit entities, infrastructure, and housing.
Moody’s rating revisions for the first half of 2012 notes downgrades of 502 public finance issuers with total par value of $142.24 billion. In contrast, 117 issuers and $14.45 billion of par amount received upgrades during the first-half of the year.
To read the full Moody’s research report, click here.