Moody's reviewing thousands of U.S. muni obligations | Reuters
(Reuters) - Moody's Investors Service is sweeping a magnifying glass over thousands of U.S. municipal sector obligations that are linked to 26 banks currently under review for possible credit rating downgrades, it said on Tuesday.
"The news could cause worry in the $3.7 trillion municipal bond market, where issuers have for the most part been successfully extending or replacing letters of credit and other expiring facilities backing their debt.
A bubble in bank letters of credit developed when the auction-rate securities market collapsed and issuers moved their money into variable-rate bonds, which need the facilities to serve as lines of credit during remarketing.
Many facilities provided during the financial crisis of 2007-08 expired last year, affecting approximately $130 billion of variable-rate bonds and issuers began turning to U.S. banks as concerns grew over financial problems in Europe."
No comments:
Post a Comment