RECEIVED
May 28, 2008 I'~ ....;; "noB
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STATE Of CAcfl'OFlNlA
Mr. Robert Grossman Ms. Gail Sussman Mr. William Montfone
Group Managing Director Group Managing Director Head
U.S. Public Finance Public Finance U.S. Public Finance Dept.
Fitch Ratings Moody's Investors Service Standard & Poor's
33 Whitehall Street, 27"' FI. 250 Greenwich Street 55 Water Street
New York, NY 10004 New York, NY 10007 ew York, NY 10041
SUBJECT: Request for Rating Equity in Government Bond Issues
Dear Mr. Grossman, Ms. Sussman and Mr. Montrone,
The City of Laguna Beach has joined the coalition of state and local public
agencies led by California State Treasurer Bil1 Lockyer, urging you to consider the
reform of the municipal bond rating system.
Historically, municipal bonds have exhibited significantly lower levels of default
than corporate bonds. However, public agencies typicaJly receive lower bond ratings,
and are often required to secure expensive bond insurance to obtain rating comparable to
those of debt issued by private corporations.
The criteria used in rating govemmentaJ debt should reflect the actuaJ risk of
buying municipal bonds. The current municipal bond rating system undermines the
effective functioning of a transparent market. This practice has resulted in substantiaJ
and unnecessary costs at the expense of taxpayers across the nation.
Please consider the reform of municipal bond ratings based on the actual risk of
default and create a unified global rating approach that treats all bond issuers equally.
This approach would better serve both investors and taxpayers. A fair and comparable
rating system for municipal bonds will likely reduce the cost of capital for public
agencies and result in more funds available for crucial governmental services and
infrastructure.
Thank you in advance for considering this request.
Sincerely,
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L ra Parisi, CPA, CCMT
City Treasurer, City of Laguna Beach
Cc: Honorable Bill Lockyer, Treasurer, State of California
505 FOREST AVE. • LAGUNA BEACH, CA 92651 • TEL (949) 497·3311 • FAX (949) 497-Q771
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