Bloomberg Law
Free Newsletter Sign Up
Login
BROWSE
Bloomberg Law
Welcome
Login
Advanced Search Go
Free Newsletter Sign Up

Muni Market Stung by $10 Billion Loss in Severe Climate Events

July 25, 2022, 6:22 PM

A wake-up call for the $4 trillion muni world: Investors holding uninsured municipal debt have been saddled with a near-$10 billion total loss in the weeks and months following disasters like hurricanes and floods.

That’s the average decline in muni-market returns -- a drop of 0.31% -- in a study of 2,000 extreme weather events from 2005 to 2018, according to a July working paper from the National Bureau of Economic Research. The authors found those “substantial price effects” after a study of county-level debt data.

Uninsured revenue bonds drove declines in the 20 weeks after a disaster, while the ...