Rating Agencies - Assessing Ability and Willingness in the New COVID-19 Normal

  • For now, the new COVID-19 normal and social distancing will continue. Uncertainty in the near team remains for the status of the health of citizens nationwide and the economy.

  • The events of recent weeks have sent most state and local governments and other municipal entities into overdrive. The priority for governments has been to concentrate on the most basic but important issues for its citizens. It is only when these needs are able to be met that governments are then able to move on and assess the potential financial impact of the new COVID-19 normal.

  • This is just the beginning of the new COVID-19 normal, and the rating agencies are charged with the responsibility of defining and assessing issuers’ abilities and willingness as it unfolds.

  • The internal process each rating agency uses is different, and we also should recognize that not only are the rating frameworks each agency uses unique, but the methods each agency uses to collect and ultimately assess issuer credit quality are also unique.

  • We anticipate that in the coming days, weeks, and months, analysts from the rating agencies will continue trying to make sense of the new COVID-19 normal.

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