Steve Higgins

ContactSteve Higgins has been a journalist for more than 25 years and has extensive experience covering business, the economy and personal finance. He spent 12 years as a business reporter for daily newspapers in Arizona, Florida, Georgia, and Connecticut, followed by 12 years as an editor, most recently as business editor of the New Haven Register in Connecticut.
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Dodd-Frank Could Result In Big Downgrades For Munis This Year, Analyst Says edit
Monday, January 30, 2012 20:50

Tags: bonds | Dodd-Frank | municipal bonds

Municipal bonds are at risk of being downgraded two or more notches this year, which could have a big impact on prices.

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The Dodd-Frank Act requires ratings agencies to review their methodology for credit ratings annually, points out Peter Hayes, head of municipals at BlackRock Inc.


That could result in “super downgrades” for municipal bonds because the spreads between higher-rated municipal bonds and less-than-investment-grade ones are “dramatic,” so a severe downgrade could significantly affect prices, Hayes says.


Muni bond investors will also have to consider the effect of likely tax policy changes, which should become clearer in the second half of the year, he added.

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