Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

A Rockier Road for Muni Money Market Funds

Posted by: Lauren Young on February 1, 2008

Standard & Poor’s just announced that that it has changed the fund credit quality ratings on the Van Kampen California Insured Tax Free Fund and the Van Kampen Insured Tax Free Income Fund to ‘AAf’ from ‘AAAf’.

S&P says: “Today’s rating actions are largely based on the change of the financial enhancement rating of Financial Guaranty Insurance Co. (FGIC) to ‘AA/Watch Dev/—‘from ‘AAA/Watch Neg/—’. The two rated Van Kampen funds’ exposure to municipal bonds insured by FGIC and other non ‘AAA’ rated securities has moved the average credit quality of the funds into the ‘AA’ category. Current investment guidelines allow for the purchase of investment-grade securities (i.e. ‘BBB-’ or better).”

If you check out my story about muni money market funds in this week’s issue of BusinessWeek, you’ll get a better handle on why this is happening. I wouldn’t be surprised if more tax-free funds get hit with downgrades in the coming weeks.

It’s going to be a rocky period for the munis.

Post a comment

 

About

Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

BW Mall - Sponsored Links

Buy a link now!