Fitch Ratings adjusts U.S. enhanced municipal bond, TOB ratings
Rating actions on U.S. enhanced municipal bonds and tender option bonds are aligning with separate decisions on the banks, insurers or underlying credits that support those securities. The moves affect dependent ratings that are tied to pre-existing support relationships rather than new standalone credit assessments.
Highlights
- Fitch Ratings adjusts U.S. enhanced municipal bond and tender option bond ratings as conforming actions directly linked to associated credit or liquidity providers.
- Dependent ratings for these securities remain tied to pre-existing support-provider ratings, with future changes in provider quality likely to drive corresponding rating moves.
- Negative developments such as rating downgrades or support expiry could pressure or withdraw ratings, while provider upgrades may enable rating upgrades after review.
Conforming actions track linked credit providers
As reported by Fitch Ratings, the rating actions on the affected U.S. enhanced municipal bonds and tender option bonds are conforming measures tied directly to separately announced actions on associated enhancement providers, liquidity providers or underlying bonds.Fitch says the ratings covered in this rating action commentary are dependent ratings, meaning they rely on pre-existing rating dependencies rather than being evaluated on a standalone basis. The agency says a full list of the affected securities is available through its additional rating details reference.
It also says the key rating drivers for each action are set out in the most recent rating action commentary for the relevant enhancement provider, liquidity provider or underlying bond. Those earlier documents also identify the primary and secondary analysts and the committee chair tied to the related credit ratings.
Dependency structure shapes future rating moves
Fitch says the specific dependency relationship for each enhanced municipal bond or TOB can be traced back to the rating action commentary published when that dependency was first established. That framework means future changes in the linked support providers or underlying credits can flow through to the dependent securities.On the downside, Fitch says negative rating action on associated providers or underlying bonds, or changes to support arrangements such as the expiry of enhancement, could pressure ratings or lead to withdrawals after review. On the upside, positive action on linked providers or underlying bonds, or a shift to a higher-rated enhancement provider, could support upgrades after Fitch reviews the revised dependency structure.
Earlier, we reported that Fitch rated Hainan Rubber’s proposed perpetual securities BBB- due to subordination and coupon-deferral features.
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