Bangkok--26 May--Standard & Poor's
The weak U.S. real estate market is just one of several sources of credit pressure in the municipal sector and, therefore, the impact of reduced property tax revenues alone is unlikely to dent local governments' credit quality, Standard & Poor's Ratings Services said today in a report.
"We recognize that a slumping housing market will continue to pressure local governments but we do not expect that it alone will result in widespread deterioration in credit quality," said Standard & Poor's managing director Steven Murphy. "While we expect isolated instances of fiscal distress and more downgrades than in previous years, we believe that the drivers of such rating actions will extend beyond the impact that declining home prices may have on a government's ability to collect property taxes and other related revenues."
In addition to a protracted property crisis, local governments face such challenges as a slow economic recovery, persistent budget gaps, the need to address pensions and retiree health care costs, and the discontinuation of federal stimulus spending. In Standard & Poor's opinion, a government's policy responses to these challenges will remain the single most important determinant of future credit stability for the sector, according to the article, "A Property Tax Drop Alone Is Unlikely To Erode Local Governments' Credit Quality".
This article will appear in a CreditWeek Special Report, "Global Housing Still Faces A Puzzling Future", to be published June 3, 2011. Standard & Poor's will be hosting a complimentary "Housing Summit 2011: Boom, Bust and Beyond", on June 9 at the Roosevelt Hotel in New York City, at which the housing market will be discussed. Registration information and a full conference agenda are available at: http://profile.standardandpoors.com/content/HousingSummit6911. For information from the summit, please follow us on Twitter: @standardpoors, @mhconstruction, @dave_guarino Tweet Hashtag: #sphs11. You can also follow us on our new blog: www.HousingViews.com.
The report is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to
[email protected]. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.
Media Contact:
Edward Sweeney, New York (1) 212-438-6634,
[email protected]
Analyst Contacts:
Steven J Murphy, New York (1) 212-438-2066
Michael P Taylor, New York (1) 212-438-1458
Horacio Aldrete-Sanchez, Dallas (1) 214-871-1426