S&P Says More Downgrades Possible In 2011 Muni Bond Markets |
| Wall Street Journal - Jan 24, 2011 |
State and local governments struggling with persistent budget gaps could push up volatility and interest rates in the state and municipal bond market in 2011, according to a report from Standard & Poor's Ratings Service.
At the same time, the ratings firm didn't forecast a significant increase in defaults, predicting the governments will be forced to make "difficult policy choices" to meet their obligations. Some could see their credit ratings downgraded if they are unable to maintain enough liquidity, the report said.
Many state and local governments are facing record budget deficits after tax revenue dropped off during the recession. Compounding that problem, economic growth during the current recovery has lagged the pace of past economic rebounds, stretching governments' reserves.
Some municipal governments will face "outright budget crises." Despite the risk to some governments, most S&P-rated state and local governments will remain "solidly" medium to high investment grade, the report said.
Read Full Article from Wall Street Journal
- Posted: 2011-01-24 10:21:24
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