PHOENIX - Moody's Investors Service is asking market participants to comment on a proposal to publish issuer ratings used as inputs for certain municipal bond ratings.
Many Moody's ratings incorporate a parent or related entity's general obligation or "issuer rating," as a reference or benchmark, and in some cases, a public rating references an issuer that does not have a public GO or issuer rating. Moody's is proposing to make public those internal ratings upon which certain bond ratings, such as limited tax general obligation ratings, may be based, said Moody's managing director Gail Sussman.
"We have a portfolio of these internal assessments that may be used as an anchor for assigning other kinds of ratings," Sussman said. "We think that the transparency for the market would be improved if we published those issuer ratings."
The proposal describes how publication of these issuer ratings will highlight the relationship between a government's various types of debt and help market participants understand how changes in the credit profiles of related entities may impact one another. Besides limited tax GOs, other types of bonds that may be related to these internal assessments include lease/appropriation/moral obligation, special tax, and municipal utilities.
Sussman said Moody's is interested in hearing from all types of market participants, and welcomes "other perspectives" on the proposal. The deadline for comments is May 23, and they can be submitted to Moody's via email.
The initial focus is on issuer ratings used as inputs in rating debt issued directly by a government or one of its subdivisions, Moody's said in an announcement. Looking ahead, the agency is likely to assign and publish issuer ratings for state or local governments that are inputs into the ratings of debt issued by related freestanding entities.
