Fitch gives USA its stamp of approval

August 17, 2011

Fitch leaves munis tied to U.S. rating at AAA, S&P downgrades

Fitch Ratings, one of the three major rating agencies and the one considered the most accurate by institutional investors, has affirmed the credit rating of the debt of the United States at AAA. As a follow-on to this action they have also maintained the AAA credit rating of municipal entities tied to U.S. Treasuries.

Going in the opposite direction, Standard & Poor’s downgraded the investment portfolio of the city of Los Angeles to AA+ because it holds 80% of its assets in U.S. Treasuries.  This follows S&P’s recent downgrade of U.S. Treasuries to AA+. The Bond Buyer reports what happened next:

Los Angeles has dropped Standard & Poor’s from rating its $7 billion investment portfolio after the agency downgraded it along with the United States last week.

“Quite frankly, we just don’t want to be associated with [Standard & Poor’s] anymore based on that decision. We think it was irresponsible and just excessive,” Thomas Juarez, the city’s chief investment officer and assistant treasurer, told The Bond Buyer.

S&P gave an honest opinion and is getting cut out of business. That is how the “paid for opinion” business works. If the entity paying for the rating doesn’t like it, then they don’t pay.

Rhode Island enhances financial disclosure for bond offerings

The Providence Journal reports that the Securities and Exchange Commission has been scrutinizing the state of Rhode Island about their financial disclosures associated with new municipal-bond offerings. As a consequence the state has expanded the level of detail that they are disclosing in their bond-offering documents. This increased transparency is critical for muniland. From the Providence Journal:

[State treasurer Gina M.] Raimondo noted that the lengthy, 240-page bond offering contains a beefed-up section disclosing Rhode Island’s finances, including an increased section (from 8 to 30 pages) detailing the challenges of the state’s $6.8-billion underfunded retirement system.

The U.S. Securities and Exchange Commission is scrutinizing two dozen Rhode Island bond offerings over the past three years, totaling $2.5 billion, to determine whether the state adequately disclosed the precarious condition of its pension system to investors. Raimondo, who took office in January, says she has cooperated with the SEC in its ongoing probe and, meanwhile, hired a Washington law firm to help the state enhance its transparency –– evident in the detailed statement that accompanies the newest bond offering.

Slimming down the children

The New York Times has a great story about a Colorado school district making the transition back to food made from scratch in an effort to reduce obesity and provide healthier food for their students. This effort is a pushback to the factory-prepared food that has taken over school cafeterias:

Colorado, which has been the least obese state in the nation since federal health measurements of American girth began, is a leader in the back-to-scratch movement. Of the 100 or so districts nationally that have worked with Cook for America, a group that trains school cooks in healthier lunch-ways and ran Greeley’s boot camp, more than half are in Colorado, including schools in the largest districts in Denver, Colorado Springs and Boulder.

@Twitter Talk

tradefast@tradefast tradefast
US tax revenues as a share of GDP are the lowest in the OECD and, at 15%, the lowest since 1950
JWG Group @jwg_group JWG Group

Fitch affirms US AAA credit rating; implement planned $2.1 trillion savings or negative outlook at end of year

Michael Pietronico @MillerTabak Michael Pietronico
the new issue market offers little value right now relative to the secondary market for tax-free bonds – find a seller who “has to sell”
Mike Stanton @MikeStanton1891 Mike Stanton
Infra debate on WSJ letters page. 2nd writer is wrong: The TZ Bridge can’t support its replacement on tolls alone.

Cate Long @cate_long Cate Long

“You don’t lead by pointing and telling people some place to go. You lead by going to that place and making a case.” – – Ken Kesey

+ Good Links +

SEC: SEC v. Larry Langford, et al., Civil Action No. 2:08-CV-00761-AKK (N.D. AL)

Reuters: FACTBOX-Municipal bond issuers with widest credit spreads

Bloomberg: Indiana Sewer Bond Leads Utility Debt Sales as Yields Plummet: Muni Credit

Bond Buyer: Market Post: Muni Investors Quietly Wait for California Deal

Bloomberg: L.A. Mayor Targets Cali. Tax Law in ‘Grand Bargain’

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