November 14, 2018
Platte County, Missouri and the Risks of Complex Debt Portfolios
In September 2018, Moody's downgraded Platte County, Missouri's general obligation (GO) rating eight notches. The downgrade resulted not from any change in the county’s financial standing, but from Moody’s view of “the county’s lack of willingness to fulfill a contractual obligation” surrounding its current level of support for a local economic development project for which there are bonds outstanding. Platte County is certainly not the first example where a general obligation bondholder has been substantially hurt by a lower-standing credit event. A thorough understanding of the debt structures in the local government sector can serve to mitigate or alleviate these derivative impacts within a fixed income credit portfolio.