Fitch Ratings, New York, said it will delay until early 2009 plans to revise its municipal ratings because of the recent extraordinary turmoil in the global financial markets. In July, Fitch released a report that said rating scales for tax-supported and water- and sewer-revenue bonds would be revised and public finance sectors such as healthcare were under review.
Robert Grossman, Fitchs group managing director for public finance, said in a written statement that the extent of its ratings revision and how it will implement changes are at issue. Fitch plans to recalibrate its municipal ratings, he said. We will be studying whether constrained market access and the associated market turmoil have an impact on municipal credit quality overall, or for any particular subgroup.
Meanwhile, the Federal Reserve moved to restore confidence in paralyzed short-term debt markets by unveiling a plan to buy taxable short-term loans, known as commercial paper, typically used by companies for payroll and operations.
Investors shaken by faltering banks have shunned short-term debtboth commercial paper and tax-exempt short-term debt, typically variable-rate demand bonds, in recent weeks. The freeze has squeezed access to capital and driven up interest rates. The Federal Reserves move is the latest effort to ease anxieties for a significant group of short-term investors: money market funds. In late September, the Treasury Department said it will temporarily guarantee funds against losses that push shares below $1. -- by Melanie Evans