(Bloomberg) -- Three public utility systems had their credit ratings put on negative watch by S&P Global Ratings after experiencing significant infrastructure damage from Hurricane Helene.
The company placed the designation on water system bonds in Asheville, North Carolina, as well as utility revenue debt sold by the Erwin Utilities Authority and Greeneville, Tennessee, according to a release from the company published Tuesday. S&P’s negative credit watch indicates the agency may lower a borrower’s credit rating in the near future.
The damage from the hurricane “may result in operating challenges, permanent ratepayer displacement, increased leverage, and corresponding negative economic pressure on the underlying service areas,” S&P said in a statement.
Natural disasters like hurricanes don’t typically impact municipal-bond ratings. But as storms become more severe, both investors and ratings companies are paying closer attention to the potential impacts on the $4 trillion market where states and cities raise debt.
The credit watch will be resolved “when there is greater clarity regarding the extent of the utilities’ infrastructure damage, how federal and state support is deployed, the projected pace of the rebuild, and the influence of these factors on each utility’s operational integrity and financial health,” Jenny Poree, an analyst at S&P, said in the statement.
The company said it will continue to assess how extensive the damage both Hurricane Helene and Hurricane Milton had on public utilities across their ratings universe.
--With assistance from Amanda Albright.
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