The three principle rating agencies reported increased volatility and a substantial number of municipal issuer downgrades last year. Yet in their respective reviews of 2009, Moody’s Investors Service, Fitch Ratings, and Standard & Poor’s each implied that while strains will certainly continue into the next year or two, municipalities should be able to withstand the financial pressure.

For Moody’s, the ratio of municipal upgrades to downgrades “weakened considerably” in the year, resulting in the lowest annual ratio of upgrades to downgrades in more than two decades. The ratio declined to 0.7 to one in 2009 from 2.4 to one in 2008.

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