The contract won’t save the city huge amounts of money each year; the contract was only worth $16,000 per year. But the loss of the rating from S & P shouldn’t affect borrowing costs for the city because the city produces a monthly report of all assets for the public to review and other agencies will still release ratings on the bonds.
But the city might not want to celebrate too quickly, the rating agency is still going to offer ratings on other forms of debt.
From the Los Angeles Times:
Los Angeles, which recently saw its $7-billion investment portfolio downgraded by Standard & Poor’s, has decided to no longer hire the rating company to rate the soundness of the city’s investments.
“We have really lost faith in S&P’s judgment,” Interim Treasurer Steve Ongele said.
After its downgrade of U.S. debt last week, S&P cut its rating of L.A.’s general investment pool to AA from AAA. It also downgraded dozens of other municipalities with large investments in U.S. Treasury notes.
Read the full article here.