Investors holding municipal bonds directly or through mutual funds could see their returns diminished by ratings agencies' recent downgrades of troubled bond insurers, according to a report prepared for Congress.

"For someone intending to sell the municipal bonds before maturity, the downgrade cuts the value of the bond," the Congressional Research Service report, sent to lawmakers on Monday, says. "How much of a loss in value would depend on how low the insurer was downgraded and the rating on the underlying bond."

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