Todd L. Ely is an Assistant Professor, School of Public Affairs, University of Colorado Denver, P.O. Box 173364, Campus Box 142, Denver, CO 80217-3364. He can be reached at firstname.lastname@example.org
Determinants of the Credit Rating Fee in the Municipal Bond Market
Article first published online: 17 MAR 2013
© 2013 Public Financial Publications, Inc.
Public Budgeting & Finance
Volume 33, Issue 1, pages 25–48, Spring 2013
How to Cite
ELY, T. L., MARTELL, C. R. and KIOKO, S. N. (2013), Determinants of the Credit Rating Fee in the Municipal Bond Market. Public Budgeting & Finance, 33: 25–48. doi: 10.1111/j.1540-5850.2013.12000.x
- Issue published online: 17 MAR 2013
- Article first published online: 17 MAR 2013
Improving transparency of prices paid by government can improve market and government efficiency. Governments regularly pay to access capital markets, yet municipal bond issuance costs remain largely hidden from public view. This study examines factors associated with credit rating fees using a decade of Texas municipal bond issuance data. We find that rating fees are lower in a competitive environment, when issuers have experience and a relationship with the rating agency, and higher when the issue is large and more complex. The findings provide evidence that credit rating agencies (CRAs) retained pricing power following the credit crisis despite reduced reputational quality.