In the event that Moody’s Investors Service strips the U.S. sovereign credit of its gilt-edged rating, top-rated state and local governments would be more at risk of a downgrade than similarly rated corporate or structured finance products.

So says Moody’s in a June 29 study. The gist of the nine-page report is that credits enhanced by, or directly linked to, the federal government’s rating would move in lockstep with any negative outlook or downgrade on the sovereign credit.

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