Even as America’s states and cities brace for hundreds of billions of dollars tax collections to disappear, the two biggest credit-rating companies have been slow to downgrade municipal debt amid increasing risk for the $3.9 trillion market. Since the pandemic raced through the U.S., S&P Global Ratings Inc. and Moody’s Investors Service have downgraded about 1% of the municipal borrowers they rate, even as sports stadiums close, college towns and dormitories are emptied after some campuses canceled in-person classes, and the steep drop in travel batters airports and tourism-driven cities. Halfway through September, Moody’s has cut the ratings of about 125 of the approximately 12,000 public finance entities it tracks, 90 fewer than the second and third quarters of 2018, when the economy was eight years into a record expansion. S&P lowered those on 175 of about 20,000 borrowers since late March.
Source: Bloomberg.
