Kentucky floods' impact may be more long-term than near-term

Bloomberg News

Credit implications from floods that have ravaged many parts of Kentucky in the past several weeks are likely more long-term than short-term, an analyst said. 

"People are generally not insured for floods at all," said Denise Rappmund, vice president of Public Finance at Moody's Ratings. "All of Kentucky is underinsured for flood events. … Underinsurance can lead to housing value erosion and potentially hurt a tax base over time."

"The concern with any of these flooding events is that we have seen delayed declarations and delayed federal disaster disbursements," Rappmund added. "This has meant that some states have felt compelled to front funds to their local governments, which Kentucky has done, and then await federal reimbursement. 

The floods don't pose a credit concern for Kentucky, since it maintains high rainy-day reserves, Rappmund said. Still, she noted, "To be clear, I do not see estimates yet on the cost of damage, so I am estimating based on past events."

The floods have affected most of Kentucky, with central, southern and eastern Kentucky hardest hit. "This flooding has … taken the lives of four children of God, gone too soon," said Gov. Andy Beshear. "People have lost their homes and so much more."

Beshear declared a state-wide emergency in late June.