Municipal bond exposure to Hurricanes Helene and Milton
A new hazard monitoring tool allows municipal bond market participants to better understand their exposure to extreme weather events.
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Within one two-week period in late September and early October of this year, two destructive hurricanes hit the southeastern United States. Hurricane Helene dropped more than 15 inches of rain over three days in parts of North Carolina, leading to flooding in Asheville and nearby communities, as well as parts of Georgia, Tennessee, Virginia, South Carolina, and Florida. Thirteen days later, Hurricane Milton struck the west coast of Florida as a Category 3 storm, causing major wind, tornado, and flood damage across the state.
Hundreds of municipal bond issuers—school districts, towns, cities, utilities, counties and hospital systems, among others—were in the path of these storms. Below, we provide overviews and maps of this exposure by combining ICE Climate’s geospatial library of municipal bond obligors with hazard evert alert boundaries from the National Weather Service, the National Oceanic and Atmospheric Administration, and the Global Disaster Alert and Coordination System.
ICE Climate recently launched a new hazard monitoring tool called Hazard Watch, which enables municipal bond market participants to analyze exposure to extreme weather events, like Hurricanes Helene and Milton, as they unfold.
Hurricane Helene Exposure
The maps below provide a view of the municipal locations exposed to flooding that occurred in the southeast United States from September 24, 2024 through the beginning of October 2024.
On the left, flood event boundaries from the National Weather Service are shown in blue, and exposed municipal boundaries and asset locations are in green. Flood boundaries are sourced from data provided by the National Weather Service and National Oceanic and Atmospheric Administration, and the municipal locations are based on linkages provided in ICE Climate’s security-level geospatial platform.
A zoomed-in view of the flood event boundaries in and around Asheville, North Carolina is shown on the right –- there are 136 CUSIPs tagged to locations in the greater Ashville area that were exposed to the Helene flooding.
Hurricane Milton Exposure
The map below shows the locations of the extreme wind, inland flooding, and tornadoes caused by Hurricane Milton. The darker orange boundary shows the area exposed to hurricane-force winds (defined by wind speeds of at least 64 knots / 74 mph), according to data provided by the Global Disaster Alert and Coordination System. The lighter orange boundary shows the area exposed to strong tropical storm-force winds (wind speeds of at least 50 knots / 58 mph). Inland flood event boundaries are shown in blue, and large tornado events (defined as a National Weather Service tornado warning spanning 1,500 km2) are shaded in purple and straddle Milton’s path from Florida’s Gulf to Atlantic Coast.
The potential extent of Florida’s municipal bond exposure is clear when we look at every location ICE links to municipal bonds within the state in the figure below. Across the state, over 650 distinct municipal obligor locations (not including state-level issuers) are linked to nearly 17,000 municipal bonds and over 700 issuers and obligors. Fortunately, most of these entities were largely unscathed by Milton’s extreme wind, flooding, and tornados.
If we peel back the geospatial clutter and focus on the a few geographically discrete types of municipal obligor assets, we can see some of the municipal bonds that had the most exposure to either one or more hazards related to Hurricane Milton more clearly. The figure below shows the municipal bond obligor locations associated with continuing care retirement communities (CCRCs), charter schools, and housing and community development districts (also referred to as ‘CDDs/dirt deals’ in the figure above).
Though the map above represents only a slice of exposed municipal locations by sector, it illustrates the inherent geospatial complexity of the municipal bond market and the value of understanding this kind of exposure. For those interested in learning more, an in-depth article about municipal bond exposure to extreme weather events and ICE’s Hazard Watch tool can be found here.
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