Report: Rating Agency Drastically Underreporting Muni Defaults

Report: Rating Agency Drastically Underreporting Muni Defaults

Defaults on municipal bonds for decades have been far higher than reported by rating agencies, bringing into question the true risk of a common investment widely considered to be safe, according to a study released Wednesday by the Federal Reserve Bank of New York.

Economists at the agency counted 2,521 muni bond defaults since 1970, whereas ratings agency Moody’s Investors Service, for instance, reported 71.

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