Wall Street: Assessing Gilt

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No Hesitation. Though the bond houses inspect the same figures and usually arrive at comparable ratings, Moody's has the reputation of being more conservative, while Standard & Poor's gives greater consideration to future prospects. Last October, for example, Moody's bumped New York State from its prime rating of Aaa to a high-quality rating of Aa because of its concern over the state's need to find new sources of tax revenue. Standard & Poor's stuck by its AAA rating, and so did the bond market, which snapped up the New York bonds without hesitation. Deep in debt from urban renewal, Baltimore last month took a one-grade demotion from Moody's, from Aa to A. Dun & Bradstreet, on the other hand, recently decided that Camden. N.J., deserved a promotion to "good."

The importance of a good bond rating became especially clear last week when two separate Mississippi issues were put on the market. Bankers hardly nibbled at-the first one, a $24.6 million water-supply-district issue bearing a Baa rating. The rating made the real differ ence, Wall Streeters insisted, and not a plea by the National Association for the Advancement of Colored People for investors to boycott the state. The next day two Mississippi school-improvement issues totaling $8,775,000 were snapped up by two New York syndicates. Moody's (Aa) and Standard & Poor's (A) had decided that the school bonds had enough gilt on their edges.