US debt ceiling impasse would hurt municipal issuers: Moody's
(REUTERS) - Funding for hospitals, states and other issuers in the US$3.7 trillion (S$4.6 trillion) United States (US) municipal bond market would be jeopardised if Congress does not raise the federal debt limit by the Oct 17 deadline, Moody's Investors Service said on Monday.
Without a deal on the debt ceiling, the US Treasury will have only US$30 billion every day to pay bills that sometimes total twice that amount for daily expenditures, Moody's said.
"Issuers would also likely face higher borrowing costs, and market access would be challenging, particularly for issuers with thin liquidity and a need to refinance debt or access the short-term note market for cash-flow purposes," Moody's said.
Most issuers have already prepared for an impasse, setting aside funds or scheduling payments to protect against possible delays or reductions in the transfer of federal funds, the credit rating agency said.