The US credit crisis spread to scores of cities, counties and school districts on Thursday as Moody's Investors Service warned their top ratings could be downgraded should the federal government's Aaa rating fall.
The rating agency said it placed 177 top-rated issuers, including 162 local governments in 31 states, 14 housing finance programs and one university on review for a potential downgrade as a result of placing the United States' rating on a similar review on July 13.
The move, which affects $69 billion of debt sold by the 177 issuers, follows Moody's placement last week of five of the 15 states it rates Aaa on review for a possible downgrade due to their heavy reliance on employment, contracts or funding from the federal government.
The states - Maryland, New Mexico, South Carolina, Tennessee and Virginia - have a combined $24 billion of affected debt. With no agreement on raising the US debt ceiling in sight, issuers in the US municipal bond market were increasingly being swept into the credit crisis.
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