Tags: S&P downgrade | municipal bonds | AAA rating

Municipalities Ditch S&P After Downgrade

Friday, 19 Aug 2011 10:59 AM

The City of Los Angeles, among other municipalities, have ceased attaching Standard and Poor's ratings to their investment funds receiving downgrades.

Other local government entities, including St. Lucie County, Florida, might drop Standard and Poor's ratings as well, the Wall Street Journal reports.

Standard and Poor's downgraded several investment pools managed by cities over exposure to U.S. Treasuries and other government securities, which were stripped of their AAA rating recently.

That move has ruffled feathers at the local level.

"They unfairly penalized us for following best practices," says Dan Wolfson, finance director in the Manatee County Clerk of Circuit Court and Comptroller's office in Bradenton, Florida, the Wall Street Journal adds.

Standard and Poor's recognizes the irritation that those who manage such funds may feel these days.

"To have the U.S. government get downgraded, they may feel frustrated and I imagine some are re-evaluating whether they have a need for the rating," says Peter Rizzo, senior director in S&P's fund-ratings group, as reported in the Journal.

Los Angeles, which saw its $7-billion investment portfolio downgraded by Standard & Poor's, says it strongly disagrees with the downgrade on the soundness of the city's investments.

"We have really lost faith in S&P's judgment," Interim Treasurer Steve Ongele says, according to the Los Angeles Times.

"The market crash that came with the real estate debacle, it happened because folks like S&P rated AAA corporations that were not worth much of anything, corporations that are no longer there today," Ongele adds.

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The City of Los Angeles, among other municipalities, have ceased attaching Standard and Poor's ratings to their investment funds receiving downgrades.Other local government entities, including St. Lucie County, Florida, might drop Standard and Poor's ratings as well, the...
S&P downgrade,municipal bonds,AAA rating
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2011-59-19
Friday, 19 Aug 2011 10:59 AM
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