Global Warming Hits Municipal Bond Market; 82 Basis Point Spread For Long-Term Miami Beach Debt
When Miami Beach borrowed $162 million from Wall Street this week, it wanted investors to know rising seas and extreme weather are a real risk to the city and that it’s doing something about it.
An increasing number of states and local governments are including climate change in their list of risks investors should consider before buying their bonds. There’s good reason. BlackRock Inc., the world’s largest asset manager, says that within a decade, more than 15 percent of debt in the S&P National Municipal Bond Index will come from regions that could suffer losses from climate change adding up to as much as 1 percent of gross domestic product annually.
“Climate is becoming a bigger and bigger part of calculating risk in our market,” said Eric Glass, a portfolio manager for fixed income impact strategies at AllianceBernstein. “We have to take these things into consideration as we build out our portfolios.” Miami Beach, which sits on a barrier island off the southeastern coast of Florida, devotes more than two pages in its official bond offering document to climate change, saying city officials are “keenly aware of the risks from hurricanes and sea level rise.”
EDIT
Miami Beach asked voters last year to approve $439 million in general obligation bonds, a fourth of which would be used to directly address the effects of climate change. The measure passed overwhelmingly. A portion of the latest sale will be used for infrastructure and capital improvements, including storm-water, flooding and mitigation efforts. The bonds priced with spreads ranging from 3 basis points for debt maturing in 2020 to 82 basis points on debt with a 3.25 percent coupon maturing in 2049, according to data collected by Bloomberg.
EDIT
https://www.bloomberg.com/news/articles/2019-04-18/climate-change-the-already-present-next-great-risk-to-munis
= new reply since forum marked as read
