(Bloomberg) -- When California sells taxable bonds to foreigners, Moody's Investors Service says the state's credit is Aaa, the highest possible. When the state sells tax-free debt to U.S. citizens, its creditworthiness is four levels lower.
The discrepancy may cost taxpayers as much as $3.6 billion in extra interest on bonds sold during 2006, said Matt Fabian, an analyst at Municipal Market Advisors, a research firm in Concord, Massachusetts. New York-based Moody's doesn't allow towns and cities to apply the higher rankings to tax-exempt financings that make up 90 percent of the $2.4 trillion in outstanding municipal bonds.
Read more at Bloomberg Bonds News
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