WASHINGTON — Pension funding bonds are more likely to hurt rather than help the credit of the state or local government issuing them, according to a report from Moody’s Investors Service.

The ability to borrow at historically low interest rates, combined with the rise of unfunded pension liabilities, can provide a strong incentive for issuers to sell pension funding bonds. Issuers can also hope to realize a savings if the return on bond proceeds exceeds the borrowing rate.

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