Moody's to Transition Public Finance Ratings to a Global Scale
Beginning in October 2008

• Details About Moody's Move to Unified Bond Ratings

Fitch Proposes 'Recalibration' of Municipal Ratings

Fitch Ratings (Fitch) on July 31, 2008 proposed to “recalibrate” or “harmonize” its municipal bond ratings. The objective, according to the Exposure Draft that announced the plan, is to provide municipal ratings that “denote a comparable level of credit risk as (Fitch's) ratings for corporate, sovereign, and other entities.” The proposal followed a series of discussions with issuers, investors and other market participants. And it comes in the wake of almost a decade of internal default studies that consistently showed Fitch has underrated municipal bonds. Fitch has not announced when it will begin to recalibrate ratings.

Read ‘Exposure Draft: Reassessment of Municipal Ratings Framework’

• California’s Comments

Rep. Frank's Legislation to Require Fair, Uniform Rating Scale

Representative Barney Frank of Massachusetts has introduced legislation to ensure fair and uniform ratings for municipal bond issuers. The legislation, H.R. 6308, would require the rating agencies to:

• Assign to all securities ratings that assess the risk an investor “may not receive payment in accordance with the terms of issuance.”
• Apply ratings in a consistent manner to all types of securities.
• Utilize qualitative rating factors only if they have a demonstrated relationship to the likelihood an issuer will default.

The House Financial Services Committee, chaired by Rep. Frank, approved the legislation on July 31, 2008.

• H.R. 6308
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