Litigation

California Municipal Bond Ratings Now Inferior To Most Structured Settlements

By John Darer

The State of California already has the lowest credit ratings of any state in the United States according to Bloomberg. Now facing a $24 billion budget deficit, the state of California is facing a further drop in its credit rating from Moodys Investor Service according to sources quoted in today's New York Post.

Tax exempt municipal bonds are an alternative to structured settlements that may appeal to high income or high net worth individuals.

Structured settlements that simulate the cash flow from a bond held to maturity however, match up very favorably to municipal bonds because payments from structured settlements are income tax free pursuant to IRC 104(a)

As of June 19, 2009 that qualified structured settlement funding assets from the following sources have superior Moodys credit ratings to the State of California's A2 Moodys rating:

United States Treasury Bonds                                                Aaa

New York Life Insurance Company, New York, NY                     Aaa
Metropolitan Life Insurance Company New York, NY                 Aa2
John Hancock Life Insurance Company                                    Aa3
Allstate Life Insurance Company, Northbrook IL                        A1
American General Life Insurance Company, Houston, TX            A1
Hartford Life Insurance Company Hartford, CT                         A1
Pacific Life and Annuity Newport Beach, CA                            A1

Note:  Municipal Bonds have different liquidity characteristics to structured settlements.

Full post as published by Structured Settlements 4Real on June 20, 2009 (boomark / email).