Municipal bond defaults occur with a frequency at least 36-fold greater than reported by credit raters, Federal Reserve Bank of New York researchers say.

When including unrated debt not covered by the firms, 2,521 issuers in the $3.7 trillion market for state and local bonds defaulted from 1970 to 2011, authors Jason Appleson, Eric Parsons and Andrew Haughwout wrote today in a blog posting. That compares with 71 reported by Moody's Investors Service for issues it rated over the period.

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