No Mass of Public Finance Downgrades Yet, Movement After Evaporating Government Support Better Indicator

  • After the Global Financial Crisis of 2007-08, we saw U.S. public finance downgrades (by Moody’s Investor Service) peak in 2012 and outpace upgrades from 2009-2014.

  • Downgrades have only slightly outpaced upgrades in the second and third quarters of 2020, but the pace will likely increase as federal relief evaporates.

  • We continue to expect downgrades will outnumber upgrades, probably for years. Future federal relief, or its absence, will be a chief contributor to the magnitude of the future public finance rating downgrade to upgrade ratio.

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