Fitch says no date for changing muni ratings scale

WASHINGTON, March 4 (Reuters) - Fitch Ratings has not determined a date for moving municipal bonds onto the same scale as corporate debt ratings, a change it already delayed once, a spokesman told Reuters on Wednesday.

In October, the agency said it was putting off action to harmonize the two ratings scales until the first quarter of 2009, but on Monday it said that 'over the near- to intermediate term, Fitch will continue to focus its efforts on maintaining appropriate municipal ratings within the existing ratings construct.'

A spokesman said Fitch, part of Fimalac SA, would consider the change once the economy and financial markets have recovered from the year-long U.S. recession and could not set a date.

Born of the near-collapse of the bond insurance industry last year, the move to create a single scale picked up momentum with both state and federal legislators this summer. The U.S. House of Representatives passed a bill mandating ratings agencies use a single scale, but that bill has yet to be taken up by the Senate.

California Treasurer Bill Lockyer was a leading proponent of rating municipal bonds on the same scale as corporate debt because, he said, on such a scale munis would most likely receive higher ratings.

Issuers had bought bond insurance to use the guarantors' high credit ratings and when those companies lost their ratings, the bonds were forced to trade on their often lower underlying ratings. That drove up the interest rates issuers had to pay to attract buyers.

Moody's Investors Services considered creating a similar scale. It said many municipal bonds would receive higher ratings because they have such low probabilities of defaulting. But the rating agency also delayed creating the new scale indefinitely and last week said it would recalibrate ratings only on taxable bonds and swaps.

(Reporting by Lisa Lambert; Editing by Kenneth Barry) Keywords: MUNICIPALS FITCH/ ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.