S&P Cuts AAA Rating On Thousands Of Municipal Bonds
by Tyler Durden
he much awaited cut by S&P of thousands of municipal bonds following its August 5 downgrade of the US has arrived. Per Bloomberg: “The rating company assigned AA+ scores to securities in the $2.9 trillion municipal bond market including school- construction bonds in Irving, Texas; debt backed by a federal lease in Miami; and a bond series for multifamily housing in Oceanside, California. Olayinka Fadahunsi, an S&P spokesman, said he couldn’t provide a dollar figure on the affected debt. “It’s expected, but nobody is happy about it,” Bud Byrnes, chief executive officer of Encino, California-based RH Investment Corp., said in a telephone interview. “No one that I know thinks it was justified to cut the U.S. bonds to AA+. Once that happened, you knew that any prerefunded bonds or escrowed bonds would be downgraded too. It’s a domino effect.”” Well, Bud, if you really have so few acquaintances, we suggest you go out more. There are some fun bars on Ventura: give us a call for the low down. As for people who do go out more, here’s one: “Chris Mier, a managing director at Loop Capital Markets LLC in Chicago who follows the municipal bond market, said the downgrades made sense, given the federal rating cut. “In order to keep the system logical and coherent, there are going to be a lot of downgrades,” Mier said in a conference call with reporters and clients.” Matt Fabian, a managing director of Concord, Massachusetts- based Municipal Market Advisors, a financial research company, said in a telephone interview that he expected “hundreds and hundreds of municipal downgrades,” which may hurt investor confidence. “Treasuries may be able to shake off a real impact from the downgrade,” he said. “Munis, I’m less sure about.” That’s ok, while nobody has any idea what is coming, that won’t stop 99.9% of those on Comcast’s financial comedy channel from opining anyway.