Moody’s Investors Service said early this week it would not put any municipal ratings in Louisiana on negative watch list following Hurricane Gustav.
The state’s large population centers were not as badly affected by the Labor Day storm as they were by hurricanes Rita and Katrina in 2005, Moody’s said, and are not likely to experience the same type of long-term economic interruptions.
Doug Benton, a vice president and chief credit officer in Moody’s Dallas office, said the storm damage was severe, but nothing like what the region experienced from the 2005 hurricanes.
“Damage from wind and flooding has been much less extensive than originally anticipated and the preparations by state and local governments along the coast were effective in minimizing damages and injuries,” he said. “In assessing the impact of Gustav on rated credits in Louisiana, we will focus on those located in the path of the storm and the surrounding parishes.”
Benton said the aftermath of the storm in the affected parishes is likely to be similar to that of the hurricanes in Florida, where they have generally not resulted in rating changes even when damage has been more severe or extensive than what appears to be the case for Gustav.
“The only possible exceptions may be debt secured by a relatively narrow stream of revenues associated with a facility or small tax base that might have sustained significant damage,” he said. “We know of no debt in the affected area that would meet these conditions.”
Moody’s analysts have spoken with state officials in Louisiana to assess the impact of Gustav, Benton said.
“The state’s large size, very conservative revenue estimates, and currently very healthy revenue condition should position it well to handle any direct cost of clean-up and any tax revenue disruption from the storm,” he said.
Louisiana’s general obligation debt is rated A1 by Moody’s and A-plus by Standard & Poor’s and Fitch Ratings.