Once-Safest Muni Bonds Tainted as Investors Await Downgrades
- Rating cut to Illinois sales-tax bonds may herald others
- SNW Asset Management sees less value, shifts to ‘underweight’
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Late last month, Fitch Ratings downgraded $2.5 billion of Illinois’s sales-tax bonds by five steps, dropping them closer to debt backed only by the state’s promise to repay.
It may not be the last ratings cut for state and local-government bonds backed by dedicated revenue including tolls, fees or specific taxes -- a pledge that investors once assumed protected them from a government’s financial distress.