Moody's Investors Services has announced that it plans to adopt a revised rating scale for municipal bonds, which could raise healthcare credit ratings by an average of one notch. The agency plans to convert healthcare and education bonds to its new global ratings scale in November, a move that should affect more than 400 not-for-profit hospitals and health systems. Not only will higher ratings improve the perception of hospitals' health, they may even give beleaguered institutions with otherwise strong credit a new ability to borrow and make new capital investments.
Since the early 1900s, Moody's has rated muni bonds separately from corporate bonds. However, the practice has brought criticism from regulators, including Connecticut's attorney general. The Connecticut AG's office announced in July that it had filed a lawsuit alleging that not only Moody's, but also major ratings firms Fitch and Standard & Poor's were issuing artificially low credit ratings for municipal bonds.
To learn more about the proposed change:
- read this Modern Healthcare article
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