S&P's downgrade of Ambac ripples through muni-bond market

08/3/2009 | Financial Times (tiered subscription model)

A downgrade of bond insurer Ambac Assurance by Standard & Poor's caused thousands of municipal bonds to lose their ratings or be downgraded. "It is not a catalyst for a major market shift, but it will reduce the valuation and the liquidity, which will spook retail investors," said Matt Fabian, managing director of Municipal Market Advisors. "You may wind up with a generation of muni bonds with semi-permanent illiquidity."

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