Perspectives Blog

Are municipal bond rating agencies shifting the goalposts (again)?

Columbia Management Municipal Investment Team, | September 30, 2013

…change in the rating agencies’ weighting of credit fundamentals. Given public rating and subsequent price volatility, thorough and independent credit research has become critically important for municipal bond investors. By Ty Schoback and Michael Taylor, Senior Analysts, Tax-Exempt Fixed-Income Research It has been just over three years since Moody’s and Fitch Ratings upgraded en masse, or “recalibrated,” tens of thousands of state and local g…

The coming divide in state credit quality

Ty Schoback, Senior Municipal Analyst | June 3, 2014

We expect an increased divergence in state credit quality in the coming years, compared with what has been seen over the past two decades. While the overall state sector remains robust, we believe notable credit distinctions are beginning to materialize among several weaker states. Investors should be aware of this divergence and seek to be appropriately compensated for investing in states of varied creditworthiness. State tax revenues typical…

Detroit’s collateral damage

Ty Schoback, Senior Municipal Analyst | October 24, 2013

The State of Michigan’s failure to preserve the integrity of the General Obligation (GO) pledge in Detroit has greatly undermined the market’s confidence in debt issued within Michigan. It has also resulted in increased borrowing costs for other Michigan entities. The State communicated to investors the UTGO security pledge of local governments should not be considered any stronger than a basic appropriation or lease, raising significant concer…