Private sector funding was used in the government’s economic stimulus package after thecollapse of the Bubble economy （1991-1993）. As a result, outstanding local bonds increased,and differentials expanded due to erosion of borrower credibility in the market. In March 1999, Japan Rating and Investment Information Inc. reported for the first time theJapanese municipal bond rating. In November 2006, Yokohama City obtained R & I. Withthis Japan has rapidly facilitated the use of municipal bond rating. Accordingly, much previousresearch has predicted that the acquisition of municipal bond rating will increase. However,this is not the case at present. Here the municipal bond rating is examined, and the following three issues are discussed.The first is the relationship between implicit security and municipal bond rating. I show thatfor local governments ratings are not essential, because of the macro and micro revenueprotection under the Ministry of Internal Affairs. The second is that municipal bond ratingsdone for local governments do not properly reflect financial benchmarks, resulting in a lackof confidence for these ratings. The third is that investor’s trust in municipal bond rating isquestionable. The discussion clarifies the need for rating companies to disclose accurate information,and the necessity for dialogue with the parties concerned for higher evaluation from localgovernments and investors.