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Top-Rated States’ Yields Steady as Downgrades Loom: Muni Credit

Top-graded states shrugged off the U.S. downgrade and a threat from rating companies to lower their credit scores as investors continued buying tax-exempt bonds.

Standard & Poor’s Aug. 5 cut the U.S. to AA+ as it believes Washington hasn’t done enough to curb spending or raise revenue to tackle record budget deficits. Yesterday the company said it may lower municipal credits after a bipartisan panel’s proposals in November to reduce expenditures. Moody’s Investors Service on July 19 put five AAA states on its watchlist for potential rating cuts because of dependency on federal funding.