WASHINGTON - Moody’s Investors Service will move to a global rating scale for its municipal bond issue ratings so that they are more in line with the ratings it issues for corporate debt, beginning in mid-April, the rating agency announced today.
As a result, Moody’s will replace all of its 70,000 “sale-level” ratings for outstanding muni bond issues of 18,000 issuers.
“We’re responding to the evolving needs of the market for greater comparability between the ratings of these obligations and those issued by other entities such as corporations,” said Moody’s Group Managing Director Gail Sussman. “The recalibration of the ratings represents a move from their expression on one scale to another and does not represent a change in our opinion of the credit quality of the affected issuers.”
Moody’s has used a separate rating scale for U.S. muni bonds since 1918. But in recent years, issuers, lawmakers and other market participants have complained that that rating scale is unfair because muni bonds generally are rated lower than corporate debt even though they have much less of a chance of going into default.
During the recalibration process, bond issues and issuers that have been recalibrated to the global scale will carry a GSR notation on moodys.com, the rating agency said. Local governments will be recalibrated by state or groups of states. All ratings within a sector generally will take place on the same day.
