Cities Threatened by Climate Risk Still Getting AAA Bond Ratings

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Bloomberg (11/02/18) Flavelle, Christopher

Large storms may cause damage to a city’s tax base and potentially its ability to pay back bonds, which is why ratings firms have warned vulnerable coastal cities that they need to make changes or face higher borrowing costs in the $3.9 trillion municipal bond market. About a year later, however, Moody’s Corp. and Fitch Ratings Ltd. have yet to downgrade a single city’s bond rating after two major catastrophes hit the United States, which the firms say is because the cities are making an effort to mitigate losses. Lenny Jones, a managing director at Moody’s, says, “If we look at our rating universe, a huge percentage of them are actually taking resilience measures. In the AA category and above, it’s like 100 percent.”

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