Municipal Rating – Is It Necessary?

Carmen Maria Constantinescu and Paul Tanasescu
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Carmen Maria Constantinescu: Bucharest University of Economic Studies, Romania
Paul Tanasescu: Bucharest University of Economic Studies, Romania

Theoretical and Applied Economics, 2014, vol. XXI, issue Special, 57-63

Abstract: This paper work puts in discussion the rating for municipal bonds, covering relevant aspects seeing the opportunity of municipal credit risk classification, in a market with information transparency problems. Conditioned by facts as the credit size, the level of remuneration and especially by the financial situation of the issuer, rating satisfy the need for synthesized information of all investors, but implies big accountability for local government. If favorable rating is a major signal of credibility in the financial market, bringing a low-cost funding of local investment projects but also notoriety for issuer, a bad classification level brings opposite. In Romania there is no specialized municipal rating system, although the specific market is one of the most developed in Southeastern Europe.

Keywords: municipal bonds; risk; rating; informational transparency. (search for similar items in EconPapers)
Date: 2014
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