Failing auctions of auction-rate securities could have a long-term negative impact on the ratings of certain public finance issuers and student loan-backed securitizations, if the current market turmoil continues, Moody's Investors Service said in a report released yesterday.

If broker-dealers don't offer liquidity as the "buyers of last resort" as they had in the past, Moody's expects additional auction failures in the coming "days, weeks, and perhaps even months." A prolonged period of market disruption that could lead to potential downgrades would be "measured in months rather than weeks" said Moody's analyst Bill Fitzpatrick.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.