Municipal Securities Rulemaking Board officials on Tuesday urged issuers to encourage Moody’s Investors Service to post rating information on the MSRB’s online Electronic Municipal Market Access system.
They made the request at the Government Finance Officers Association’s winter meeting in Washington during a session of the governmental debt management committee. That was less than two months after the two other major rating agencies, Fitch Ratings and Standard & Poor’s, began posting free rating information on EMMA for all of the individual municipal securities they rate.
Moody’s, the lone holdout, has said it is continuing to monitor the board’s proposal. A Moody's spokesperson has not responded to a request for comment.
In comments and interviews, MSRB officials placed the onus on Moody’s to join the other two major rating agencies.
“We will make EMMA available to anyone who chooses to put up ratings for free and Moody’s knows that,” said board chairman Alan Polsky, a senior vice president at Dougherty & Co. in Minneapolis.
Several issuers expressed frustration with Moody’s stance.
During a question and answer session, Frank Hoadley, Wisconsin’s capital finance director, asked board officials if the agency’s failure to participate was due to technical issues stemming from EMMA or a Moody’s policy.
MSRB executive director Lynnette Kelly said while she knows no concrete reasons for Moody’s stance, it is not a technical issue. To the extent GFOA encourages its participants to raise their concerns with Moody’s, “that would be terrific,” she said.
If all three agencies share information with EMMA, GFOA could ask the Securities and Exchange Commission to change its rule requiring issuers to post material event notices on EMMA after a rating change, Kelly said.
Under SEC Rule 15c2-12, issuers must file event notices on EMMA for rating changes. They need to continue to monitor Moody’s for downgrades or other rating changes since the rating agency has not agreed to place such information on EMMA.
Another issuer noted that municipalities pay these agencies for ratings and said the rating agencies have a responsibility to make that information available to all market participants. “So we will do what we can to help,” said Ben Watkins, Florida’s director of bond finance.
“Please,” Polsky said.
In an interview, Kelly, referring to Moody’s, said: “They have their own reasons for participating or not. Clearly, as a private company, they can do what they want.”
Hoadley told The Bond Buyer he will let Moody’s know he thinks this is an important issue. “Those ratings should be up there alongside the others,” he said. “It’s a no-brainer.”
Separately, Kelly said the board’s professional qualifications exam for municipal advisors, originally slated to debut this fall, will be delayed pending the SEC’s release of a permanent municipal advisor registration scheme and definition of municipal advisor.
The board is developing questions based on general muni market subjects, such as the fiduciary obligations of a municipal advisor.
But until the SEC issues a final definition, it cannot develop the entire set of questions, Kelly said in an interview.
In late December, the SEC extended its interim registration scheme and definition, which were slated to expire Dec. 31, for an additional nine months, until Sept. 30.