Public access to municipal bond ratings has historically been hit or miss, so the announcement from the MSRB earlier this week that its EMMA website will include bond ratings free of charge is an important milestone for municipal disclosure.

The Municipal Securities Rulemaking Board (MSRB) announced that starting next week, rating actions from Fitch and Standard & Poor’s will be available free of charge on its EMMA website for bonds rated by the two agencies.

For retail investors (so called mom and pop), bond ratings have always been difficult to keep up with. Initial ratings for new bond issues are found in the official statements posted on EMMA, but changes are subject to the borrower complying with SEC Rule 15c2-12 which requires rating changes to be reported within 10 business days as material events.

A cursory review of EMMA postings shows that more than a third of hospitals failed to do so, so getting the updates from rating agencies ought to be an improvement, with some caveats:

  • Moody’s is not participating in the new service. Hospitals must continue to post Moody’s rating changes in order to comply with 15c2-12. 
  • It’s not clear if the service will fulfill 15c2-12 requirements for S&P and Fitch rating changes. Until this is confirmed, hospitals may want to continue posting their rating changes to EMMA to be on the safe side.
  • The actual rating reports with all the juicy details will not be included. Investors without paid access to rating agency feeds will still be on their own to guess what’s behind the changes.

According to the MSRB, rating outlook changes will be provided (e.g. negative/stable/positive), which will give retail investors a valuable heads up on what the future may hold.

Stay tuned for the service launch on 11/17/11.