Investing Tax Free

Municipal Bond Ratings

Below is a complete explanation of municipal bond ratings. There are two major municipal bond ratings agencies. They are Moody's Investors Service and S&P which stands for Standard & Poor's. The two respective municipal bond ratings are called Moody's Municipal Bond Ratings and S&P Municipal Bond Ratings or commonly known for short as Moody's Ratings and S&P Ratings.

Factors that Help Calculating Municipal Bond Ratings

Municipal bonds rating indicates the merit of municipal bonds which depends on whether the bond is backed by the full faith, credit, and taxing powers of the municipality or by revenues generated by the municipal facility the bond issue finances. Consider issuer-specific information such as the wealth of the community, characteristic of the issuer, revenue stream of the project the bond is used to fund. By examining the municipal bond, you can see if it should have high ratings or low based on the factors above.

The Importance and Uses of Municipal Bond Ratings

When investing in municipal bonds, municipal bond ratings will help you decide the creditworthiness of the municipal issuer and how likely you are to be paid back the principal plus the interest payments that the bond promises. Both municipal bond ratings agencies use alphanumeric ratings. You should learn to read the meaning of ratings for municipal bonds.

Municipal bond rating agencies including Standard & Poor's,  Moody's and Fitch's evaluate the credit quality of municipal bonds and publish their municipal bonds ratings, to assist those wanting to invest tax free.

Revisions of Municipal Bond Ratings

In some circumstances, either or both Moody's bond ratings or S&P ratings may be revised or withdrawn entirely. Any such revision or withdrawal of such bond ratings may have an effect on bond market prices.


Municipal Short Term Note Ratings

The above municipal bond rating agencies not only rate and publish municipal bond ratings, they also evaluate and publish the short term municipal note ratings. See Municipal note ratings for a list of ratings for short term municipal notes.