Tuesday, July 19, 2011

MOODY'S PLACES RATINGS OF FIVE OF 15 Aaa STATES ON REVIEW FOR POSSIBLE DOWNGRADE DUE TO U.S. SOVEREIGN RISK VULNERABILITY

Deregulation of the financial industry set the table for the financial crisis. As deregulation continues to be proffered for budget woes, such as for oil and gas drilling, the following Moody's warning is something to keep an eye on and to keep in mind as part of the many unfolding consequences of financial deregulation.

"APPROXIMATELY $24 BILLION OF RATED DEBT AFFECTED; HIGH FEDERAL EMPLOYMENT AND MEDICAID EXPOSURE CITED

New York, July 19, 2011 -- Moody's Investors Service has placed on review for possible downgrade the Aaa ratings of the states of Maryland, New Mexico, South Carolina, Tennessee, and the Commonwealth of Virginia. In connection with Moody's July 13 action placing the Aaa government bond rating of the United States on review for downgrade, Moody's announced that it would assess the ratings of Aaa-rated states to gauge their sensitivity to sovereign risk. The review actions affect a combined $24 billion of general obligations and related debt.

Should the U.S. government's rating be downgraded to Aa1 or lower, these five states' ratings would likely be downgraded as well. Moody's will review the ratings of the five states on a case-by-case basis and announce any rating actions within seven to ten days following a sovereign action."...


..."NEW MEXICO

• Sensitivity to national economic trends compared to other Aaa-rated states based on Moody's Economy.com measure of employment volatility due to U.S. fluctuations: Below average

• Federal employees as a percentage of the state's total employment: Above average

• Capital markets risk: Relatively high due to above average amount of puttable variable rate debt outstanding

• Federal procurement contracts as a percentage of state gross domestic product: Above average

• Medicaid as a percentage of total expenditures: Above average

• Available fund balance as a percentage of operating revenue: Above average" More>>>>

Related article:

Big US Banks Ate Everyone's Lunch: Strategist

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