Municipal Bond Forum
Failed issues never rated
Q
In your article, you made a statement concerning the default on nine separate bonds that didn’t have an S&P rating. The problem with that statement is that by the time the bond defaults, S&P has already withdrawn its rating generally due to non-compliance by the issuer with financial reporting requirements. Therefore, in the current market, a bond that did have a “AAA” rating can now not be rated due to the insurer’s default and financial problems with the issuer. To say that the nine defaults were not even rated by the S&P isn’t as meaningful as a statement that the nine defaulting bonds were never rated.
A
James A. Klotz responds:
Your point is well taken. The nine issues we referenced were never rated.
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