Default Rates
The historical default rate for municipal bonds is lower than that of corporate bonds. The Municipal Bond Fairness Act (HR 6308), introduced September 9, 2008, included the following table giving bond default rates up to 2007 for municipal versus corporate bonds by rating and rating agency.
Cumulative historic default rates (in percent) ------------------------------------------------------------------------ Moody's S&P Rating categories --------------------------------------- Muni Corp Muni Corp ------------------------------------------------------------------------ Aaa/AAA......................... 0.00 0.52 0.00 0.60 Aa/AA........................... 0.06 0.52 0.00 1.50 A/A............................. 0.03 1.29 0.23 2.91 Baa/BBB......................... 0.13 4.64 0.32 10.29 Ba/BB........................... 2.65 19.12 1.74 29.93 B/B............................. 11.86 43.34 8.48 53.72 Caa-C/CCC-C..................... 16.58 69.18 44.81 69.19 Investment grade................ 0.07 2.09 0.20 4.14 Non-invest grade................ 4.29 31.37 7.37 42.35 All............................. 0.10 9.70 0.29 12.98 ------------------------------------------------------------------------Read more about this topic: Municipal Bond
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