Although all three rating agencies upgraded more public finance credits than they downgraded in the third quarter of 2008, some actions have already started to reflect the pressures that will weigh on issuers from the weakening economy and market turmoil.

Noting the stress on the municipal market, Moody's Investors Service had its lowest ratios of upgrades to downgrades in more than two years, upgrading 2.6 credits to every downgrade it made in the third quarter, compared to 3.8-to-1 in the second. Fitch Ratings upgraded 2.91 credits to every downgrade in the third quarter compared to 1.4-to-1 in the second, but also had more credits with negative outlooks than positive outlooks for the second consecutive quarter.

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