Moody's to recalibrate taxable U.S. municipals, municipal swaps, changes to other munis on hold

By Angela McDaniels

Tacoma, Wash., Feb. 13 - Moody's Investors Service said it will recalibrate its outstanding global scale ratings on taxable municipal bond issues and municipal issuers' obligations under swap transactions.

The recalibration is meant to produce recalibrated global scale ratings that will be comparable to ratings assigned to other issuers of similar credit risk, the agency said.

Migration suspended

The agency previously announced plans to migrate all of its U.S. municipal ratings to the global scale and provided guidance about the process in September.

On Friday, the agency said it has temporarily suspended the migration of the municipal portfolio as a whole due to the severe disruptions in the credit markets.

Consequently, Moody's is proceeding with the recalibration of the existing global scale ratings at this time.

Lower ratings likely

The recalibrated global scale ratings will be assigned by rating committees composed of analysts from Moody's corporate, financial institutions, sovereign, sub-sovereign and credit policy teams as well as U.S. municipal bond analysts, according to an agency news release.

As a result of the recalibration, 23 of the 28 outstanding global scale ratings have been placed under review. Of the other five existing global scale ratings, three have already been recalibrated and two were already under review.

The recalibration is expected to result in lower ratings in some, but not all, cases, and the recalibrations will be announced as they are completed.

Ratings under review include:

• Allentown, Pa.'s series 2007A and series 2007B federally taxable general obligation notes, which are rated Aa3;

• Connecticut's taxable series 2008A, 2008B and 2008C current interest G.O. bonds issued for the Teachers' Retirement Fund, which are rated Aaa;

• Florida Hurricane Catastrophe Fund Finance Corp.'s series 2007A floating-rate notes, which are rated Aa1;

• Haverstraw, N.Y.'s federally taxable series 2008A urban renewal serial G.O. bonds, which are rated Aa1;

• Illinois' pension funding series 2003 G.O. bonds, which are rated Aaa;

• Kansas Development Finance Authority's series 2004C revenue bonds issued for the Kansas Public Employees Retirement System, which are rated Aaa;

• Kern County Water Agency Improvement District 4, Calif.'s federally taxable series 2008B water revenues certificates of participation, which are rated Aa1;

• Lebanese American University's series 2007 taxable bonds, which are rated A3;

• Michigan Municipal Bond Authority's federally taxable series 2008A-1, series 2008A-2, series 2008A-3 and series 2008-4 taxable school loan revolving revenue and refunding bonds, which are rated Aaa;

• The Nature Conservancy's extendible notes, which are rated Aa1;

• New Jersey Economic Development Authority's series A and series B business employment incentive program bonds, which are rated Aa1;

• New Jersey Sports and Exposition Authority's series 2007B-1, series 2007B-2, series 2007B-3 state contract bonds and series 2008A refunding bonds, which are rated Aa1;

• Oregon's G.O. series 2003 pension bonds, which are rated Aaa;

• Port Authority of New York and New Jersey's series 150th taxable bonds, which are rated Aa1;

• Puerto Rico Employees Retirement System's series A and series B senior pension funding bonds, which are rated A1;

• Purdue Research Foundation, Ind.'s series 2007 taxable bonds, which are rated Aaa;

• Sacramento County, Calif.'s series 2008 taxable pension funding bonds, which are rated Aa1;

• City and County of San Francisco's series 2008R-2 taxable G.O. refunding bonds, which are rated Aaa;

• St. Louis Municipal Finance Corp., Mo.'s series 2007 taxable leasehold revenue bonds, which are rated Aa3;

• Tulsa Public Facilities Authority, Okla.'s taxable series 2008 capital improvements revenue bonds, which are rated Aa1;

• University of Miami's series 2007C revenue bonds, which are rated Aa3;

• University of Pittsburgh Medical Center's interest rate swaps related to series 2007A-1, series 2007A-2, series 2007B-1 and series 2007B-2 bonds, which are rated Aa1; and

• University System of New Hampshire's series 2007 taxable bonds, which are rated Aa1.

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