Bank-Supported Muni Market Faces ‘Headwinds,’ Moody’s Says
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The market for bank-supported municipal debt, including variable-rate demand bonds, may face “headwinds” this year because of possible cuts in bank ratings, Moody’s Investors Service said.
Top short-term ratings for both Bank of America Corp. and Citigroup Inc. are under review for a downgrade, according to the credit-rating company. Losing the top grade may cause interest rates on $34.7 billion of municipal bonds to spike as money-market funds redeem the debt and dealers can’t resell it, Moody’s said in an e-mailed statement.