Two rating agencies have come out with differing opinions on the likely credit impact of the wildfires that have decimated large swaths of central Oregon and Spokane County, Washington.
Blazes that erupted on Aug. 1 in and around Spokane, Washington's second largest city, have destroyed or damaged 900 structures and forced 65,000 people from their homes.
The fires have been largely contained, but the extent of insured losses remains uncertain, with insurers subject to the state's ongoing fire-loss reporting requirements, S&P Global Ratings said.
Oregon's fires have burned more than 2.3 million acres, but mostly in sparsely populated areas, said S&P, adding that limits the direct effects on issuers the agency rates.
While S&P analysts said in a report Tuesday the wildfires should have limited near-term credit impact, Moody's Ratings analysts said the wildfires in Spokane "underscore Washington's growing environmental risks as climate-related disasters become more frequent and severe."
While the full extent of economic losses has not been determined, the scale of the evacuations and damage "underscore the growing credit risk that wildfires pose in the Pacific Northwest given their potential to disrupt major economic population centers," Moody's analysts
The two state governments' ratings are supported by issuer reserves and federal and state response programs sheltering them from the immediate fiscal impact of the wildfires, S&P analysts said.
Beyond similarities there, the source of credit pressure differs between the two states, S&P said.
Washington's levy framework generally "cushions property tax losses, but fire activity has also affected more populated and economically significant areas, leaving cities and counties exposed to revenue loss and school districts to enrollment decline," S&P analysts said.
Oregon's fixed-rate framework provides less automatic recovery support from fire-related property tax losses.
However, much of that state's burned acreage is concentrated in sparsely populated areas, S&P said, so far limiting Oregon issuers' direct credit exposure from the current fire season.
Going forward, S&P said "tax base concentration, revenue diversity, reserves and market access will influence issuers' capacity to absorb multiyear temporary revenue losses, multiyear delinquencies, and unreimbursed recovery costs. In both states, wildfires' effects can extend beyond burn perimeters because smoke, road closures and reduced access disrupt commerce and other activity, creating revenue or operating pressure even where physical damage is limited."
S&P is tracking the impact on 29 local government entities, five special-purpose districts and nine public utility operators affected by the fires.
