Major declines expected in the value of state and local government pension investments may have a negative impact on pension funding levels, but are unlikely to result in immediate ratings changes for municipal issuers, Moody's Investors Service said in a report released yesterday.

Sharp decreases in the value of retirement systems' investments, as reflected by large drops in stock indices, come not only as stocks are on track for one of the worst years in recent memory but also as "alternative" investments such as hedge funds, which pensions have used to offset exposures to stocks, have also suffered major losses, the report said.

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