Assessing Gilt

(2 of 2)

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.

1. McCain's Foreign Policy Frustration
2. Banksy: An Artist Unmasked
3. LeBron's Gold Guarantee
4. Berlin Awaits the 'Next JFK'
5. When Jellyfish Attack
6. A New Cold War in the Caribbean?
7. Woman Kills Self Before Foreclosure
8. Facebook: Movement or Business?
9. Goodbye to France's 35-Hour Week
10. Dr. Dre's Headphones: Chronically Good