Moody’s Defied as Local Bond Risk Falls to 2010 Low: Muni Credit
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Investor confidence in U.S. municipal debt is the highest in three years even as Moody’s Investors Service warns that local-government credit quality is set to weaken for the 18th straight quarter.
It cost the annual equivalent of as little as $133,000 this month to protect $10 million of local bonds for 10 years through credit-default swaps, according to Markit Group Ltd. data compiled by Bloomberg. That’s the cheapest since April 2010. The municipal market isn’t alone in benefiting from bets on economic growth. The cost of contracts linked to U.S. corporate debt is close to the lowest since 2007, and for Western European sovereign obligations it’s the cheapest since 2010.