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Author: Marc D. Joffe
Publisher:
ISBN:
Category :
Languages : en
Pages : 22
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Book Description
I estimate that the contemporary system of municipal bond ratings costs issuers over $2 billion annually. Fees paid to rating agencies directly account for about $500 million of this total. The greater burden on issuers arises from the relatively harsh ratings that agencies assign municipal bonds viz.-a-viz. other instruments. These costs take the form of additional interest paid to investors and purchases of municipal bond insurance intended to reduce this interest burden. Since defaults by rated municipal bond issuers are so rare, and since defaulting issuers can usually be identified ahead of time by accounting ratios and economic indicators, I conclude that significant cost savings are possible by replacing the current rating system with model-based assessments that yield higher ratings overall while still differentiating at-risk issuers.
Author: Marc D. Joffe
Publisher:
ISBN:
Category :
Languages : en
Pages : 22
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Book Description
I estimate that the contemporary system of municipal bond ratings costs issuers over $2 billion annually. Fees paid to rating agencies directly account for about $500 million of this total. The greater burden on issuers arises from the relatively harsh ratings that agencies assign municipal bonds viz.-a-viz. other instruments. These costs take the form of additional interest paid to investors and purchases of municipal bond insurance intended to reduce this interest burden. Since defaults by rated municipal bond issuers are so rare, and since defaulting issuers can usually be identified ahead of time by accounting ratios and economic indicators, I conclude that significant cost savings are possible by replacing the current rating system with model-based assessments that yield higher ratings overall while still differentiating at-risk issuers.
Author: Paul G. Farnham
Publisher:
ISBN:
Category : Municipal bonds
Languages : en
Pages : 110
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Book Description
Author: Gerald R. Jantscher
Publisher:
ISBN:
Category : Bonds
Languages : en
Pages : 50
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Author: Twentieth Century Fund. Task Force on Municipal Bond Credit Ratings
Publisher:
ISBN:
Category : Municipal bonds
Languages : en
Pages : 180
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Author: Twentieth Century Fund. Task Force on Municipal Bond Credit Ratings
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 180
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Author: Barry R. Marks
Publisher:
ISBN:
Category :
Languages : en
Pages :
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In the municipal bond market, announcements of changes in general obligation bond ratings by the rating agencies are typically made concurrently with announcements of new bond issues. Hence, prior research on the information content of municipal bond rating change announcements is subject to the possible confounding effects of concurrent announcements of new bond issues. Jantscher ( 1970) concluded that bonds sell at prices that reflect rating changes prior to the actual change announcement. Ingram et al. (1983), on the other hand, report that municipal bond prices respond contemporaneously to rating change announcements, i.e., that the market is not able to anticipate rating revisions. However, since Ingram et al. (1983) did not control for the potential information effects of concurrent new issues, their results could be misleading, whereas Jantscher only examined new issues. This paper examines the effect of rating change announcements on municipal seasoned bond prices after controlling for the potentially confounding effects of new bond issues.
Author: Marc D. Joffe
Publisher:
ISBN:
Category :
Languages : en
Pages : 18
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Credit rating agencies implemented a "dual ratings system" under which US municipal bond issuers are assessed more harshly that other types of issuers. This system created an artificial demand for bond insurance because the so-called monoline bond insurers were rated more leniently than the governments they insured. Using the Ambac Bond Insurance Cases, Superior Court of California Case Number CJC-08-004555, as a reference point, this paper discusses the origins of the dual ratings system and its costs to state and local government borrowers. Although the bond insurance business was a casualty of the 2007-2008 financial crisis, I find that the dual ratings system remains and that insurance is re-emerging - to the detriment of government bond issuers and their stakeholders.
Author: George H. Hempel
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 180
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Author: Alan Rabinowitz
Publisher: John Wiley & Sons
ISBN:
Category : Business & Economics
Languages : en
Pages : 280
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Author: Robert Ross Godfrey
Publisher: JAI Press(NY)
ISBN:
Category : Business & Economics
Languages : en
Pages : 262
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Book Description
