Another Texas city on S&P watch after Harvey
DALLAS – Heavily damaged Port Aransas, Texas, has joined two other coastal cities on S&P Global Ratings’ watch list for a possible downgrade in the aftermath of Hurricane Harvey.
Port Aransas, which was almost dead-center when Harvey made landfall Aug. 25, is rated AA-plus.
"The CreditWatch placement reflects our view of the uncertainty regarding potential deterioration in the city's tax base, financial flexibility, and liquidity available to fund expenditures related to Hurricane Harvey recovery and cleanup efforts," said S&P Global Ratings credit analyst Sarah Smaardyk.
The watch list placement means a one-in-three chance of a downgrade within 90 days, Smaardyk said.
The CreditWatch placement on Tuesday follows those of Orange, rated AA-minus, and Rockport, Texas, rated AA, last week.
S&P raised Port Aransas’ rating to AA-plus from AA-minus in 2013.
With a permanent population of about 3,500, Port Aransas is on Mustang Island about 25 miles north of Corpus Christi. The city and the surrounding area are popular tourist destinations and a hub for commercial fishing.
On Monday, S&P provided a review of its credits that were in the hurricane’s impact zone, most of which will not see any ratings action as a result, analysts said.
“In our experience many cities and counties—even those in the direct line of a storm—do not sustain a level of damage we consider to be impactful to long-term credit quality,” the S&P report said. “While many of these credits did have storm damage, given available liquidity and/or management's ability to quickly address the damage, in our view the long-term credit impact appears minimal at this time.”