US - Fitch has assigned a BBB+ long term rating to bonds issued by St. Louis Municipal Finance Corporation with the intention of funding a shortfall in three municipal pension systems.
Fitch rated Missouri's US$143m taxable leasehold revenue and refunding bonds BBB+ and affirmed the A- long-term rating on $54.8m of St. Louis' general obligation (GO) bonds.
The development comes after Global Pensions reported in August 2007 that St. Louis moved to defend the bond issue, after the chairman of the Securities Exchange Commission (SEC) criticised the vehicle’s outdated legislation.
In a speech to Californian investors on 18 July, Christopher Cox, chairman of the SEC, warned that laws governing the sale of these bonds dated back to the 1930s, when the market was considerably smaller.
Citing the recent prosecution of San Diego, Cox commented in July: “One would think, given the size and importance of this market, that investors in municipal bonds can rest assured that their interests are fully protected by the same high standards that operate everywhere else in the US capital markets. Not exactly. And not even close.”
The St. Louis Municipal Finance Corporation (SLMFC) is a nonprofit corporation under Missouri law which finances, acquires and leases real and personal property for the City of St. Louis.
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