While we worry, sort of, about the Grecian formula for bankruptcy, it turns out that seven cities in the US have spectacularly-bad credit:
Last quarter, Moody’s Investor Services declared the debt issued by Harrisburg, Pa., and Woonsocket, R.I., to be junk, or below-investment grade. Meanwhile, Fitch Ratings currently has four other cities in the basement Detroit and Pontiac, Mich.; Harvey, Ill.; and Littlefield, Texas while Standard and Poor’s has one Central Falls, R.I.
As Ed McMahon might have said: “How bad are they?”
Moody’s knocked the rating on Harrisburg’s general-obligation bonds three notches to B2 five steps below investment grade. To put that into perspective: Moody’s rating on Greece’s government debt sits at A3 still investment grade.
Central Falls gets a C from S&P, which is one step above actual default.
Should anyone be concerned: Oklahoma City’s bonds are rated at Aaa by both S&P and Moody’s.
You might be a bit skeptical of the rating services these days, but be assured, there aren’t any toxic mortgages mixed in with the municipal bonds. Not even in Harrisburg.
(Spotted at Anchor Rising.)