Misrated Muni Market Hoists $1.8 Billion Annual Tab on Taxpayers

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Historically, ratings haven’t reflected the safety of local debt: Munis graded single-A defaulted at less than one-third the rate of like-ranked corporate debt over the 30 years through 2010.

Photographer: Kevork Djansezian/Getty Images

U.S. states and localities still aren’t getting the respect they deserve in fixed-income markets five years after Congress mandated that municipal debt be graded on a level playing field with company borrowings.

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