{"id":15550,"date":"2012-08-18T21:33:52","date_gmt":"2012-08-19T01:33:52","guid":{"rendered":"http:\/\/cfif.org\/v\/freedom_line_blog\/?p=15550"},"modified":"2012-08-18T21:33:52","modified_gmt":"2012-08-19T01:33:52","slug":"moodys-warns-it-may-downgrade-california-municipal-debt","status":"publish","type":"post","link":"https:\/\/cfif.org\/v\/freedom_line_blog\/15550\/moodys-warns-it-may-downgrade-california-municipal-debt\/","title":{"rendered":"Moody&#8217;s Warns It May Downgrade California Municipal Debt"},"content":{"rendered":"<p>The <a href=\"http:\/\/www.huffingtonpost.com\/2012\/08\/17\/california-bankruptcies_n_1799543.html\" target=\"_blank\">Huffington Post<\/a> summarizes a new Moody\u2019s Investor Service report that could significantly alter municipal California\u2019s fiscal future:<\/p>\n<blockquote><p>Moody&#8217;s reports that some cities are turning bankruptcy as a new strategy to take on budget deficits and avoid obligations to bondholders, an emerging dynamic that could have ripple effects throughout the investment community.<\/p>\n<p>The municipal bond market has long been characterized by low default rates and relatively stable finances, Moody&#8217;s said, but that outlook is beginning to change as bankruptcy becomes a tool for cash-strapped cities.<\/p><\/blockquote>\n<p>Already three California cities \u2013 Stockton, San Bernardino, and Mammoth Lakes \u2013 have filed for bankruptcy.\u00a0 HuffPo quotes Moody\u2019s as saying that of California\u2019s 482 cities, more than 10 percent have declared a fiscal crisis.<\/p>\n<p>Historically, municipal bonds have been some of the safest investments on the market because cities are presumed by analysts to want to pay back their debt in order to maintain access to public bonds.\u00a0 (Bonds pay for things like school buildings, roads, sewage systems, etc.)<\/p>\n<p>Since California is responsible for 20 percent of the nationwide muni bonds in circulation, a downgrade by a ratings agency like Moody\u2019s would have a significant negative effect on the value of heretofore safe investments.\u00a0 If investors see California as an unsafe bet \u2013 and why wouldn\u2019t they \u2013 expect to see the muni bond market dry up and even more cities opting for bankruptcy.<\/p>\n<p>In other words, this is very bad.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Huffington Post summarizes a new Moody\u2019s Investor Service report that could significantly alter municipal California\u2019s fiscal future: Moody&#8217;s reports that some cities are turning bankruptcy as a new strategy to take on budget deficits and avoid obligations to bondholders, an emerging dynamic that could have ripple effects throughout the investment community. The municipal bond [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[3770,299,3772,81,56,3771,3769,2996],"class_list":["post-15550","post","type-post","status-publish","format-standard","hentry","category-posts","tag-bond","tag-california","tag-credit","tag-debt","tag-government","tag-moodys","tag-municipal","tag-rating"],"_links":{"self":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/15550","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/comments?post=15550"}],"version-history":[{"count":5,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/15550\/revisions"}],"predecessor-version":[{"id":15555,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/15550\/revisions\/15555"}],"wp:attachment":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/media?parent=15550"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/categories?post=15550"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/tags?post=15550"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}