Patricia Healy, CFA quoted in…
Ratings upgrades still outpace downgrades as rated universe of munis grows
By Christina Baker – The Bond Buyer – May 07, 2024
Excerpt follows:
Municipal issuers have seen more upgrades this year than downgrades, continuing a trend that began in 2021, while the overall rated universe of muni issuers has also grown.
If current economic conditions persist, the trend will likely continue for the foreseeable future, market participants said.
One of the biggest current challenges to municipal credit ratings is a shortage of accountants, Patricia Healy wrote in a commentary for Cumberland Advisors. Local governments often struggle to recruit talent, so a national wave of accountants retiring with too few replacements has hit municipal issuers especially hard.
Municipalities have thus struggled to complete financial statements on time, which led S&P to place almost 200 issuers on CreditWatch negative last month, Healy wrote.
"We note that this shortage of accountants comes at a time when the Securities and Exchange Commission and investors are requiring more detailed disclosure, including climate-related information," Healy added.
Climate change presents a more long-term danger to municipalities' credit, according to Municipal Market Analytics. Over time, natural disasters will become more and more common; the destruction they wreak will simultaneously require great capital repairs and damage governments' ability to collect revenue, the firm said.
Read the full story here (paywall): https://www.bondbuyer.com/news/credit-upgrades-outpace-downgrades-rated-universe-of-munis-grows
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