Harrisburg, PA Bond Default Notice
The US Congress and the SEC are currently grilling CEOs of Moodys and S&P about the future of the ratings agency model. One problem is the inherent flaws due to conflicts of interest. Stale data is another.
For example, Harrisburg, PA’s incinerator bonds are in financial default. So why does Moody’s and S&P have those same defaulted bonds rated highly at AA3 and AAA? Sure the bonds are insured but it seems Harrisburg has real problems that dont jive with a top credit rating. Do you think that the next time Harrisburg tries to raise money the marketplace will agree with their wallets that these bonds deserve a AAA rating? Uhhhh No.
History clearly shows that markets have the intelligence to predict bad news thru market price based rating systems. To see Market Ratings for your muni bonds, check out www.bondview.com , a free analysis tools for muni bond investors.
What does a real bond default look like? Here is the default notice
Here is the default notice