In the third quarter issue of our municipal fixed income market commentary we feature:

  • A hurricane went raving by, by Stephen Winterstein.
  • Ineptitude, damned ineptitude, and the city of Hartford, by Clyde B. Lane Jr.
  • Fizzled fission, by Karleen Strayer, CFA.

The third quarter was plagued by several natural disasters, two of which left indelible marks on areas of the United States, and the other considerable damage.

First, on August 25, Hurricane Harvey made landfall in Texas, inflicting most of its damage on the coastal areas of Texas and Louisiana. The destruction was most acute in Houston and its immediate surroundings in Harris County.

Immediately following Harvey, Wilmington Trust’s own Gerard Durr wrote, “We believe many of these credits have been weakened by the effects of Harvey, some considerably. We also expect that a handful or more could be downgraded over time; however, it is too early to tell. The extent and timing of recovery aid will be a key determinant in assessing future credit quality. We have no reason to believe that federal aid will arrive with any less speed than in recent disasters and can argue that in this instance the timing and extent of federal aid may exceed prior experience. We also believe Texas is secure in its rating and will be a strong partner to those credits that need assistance.

Please see important disclosures at the end of the article. 

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