Hurricane Sandy may have caused billions of damage when it ripped through Connecticut and other East Coast states in late October. Despite widespread flooding, power outages and damage, Moody’s Investors Service says Sandy “should not change the credit quality of public finance bond issuers.”
In a report written by the rating company, it’s predicted that repair costs could pose some budget problems.
"Many local governments experienced flooding, fires, power outages, water damage, and heavy garbage and debris removal costs that could lead to temporarily lower cash balances or higher debt burdens, but do not fundamentally threaten long-term credit quality," said Robert Kurtter, a Moody's managing director, in a press release. "We assume issuers will recoup most costs through federal disaster funding, so these expenditures primarily represent a temporary reduction in reserves."
Parts of Long Island, N.Y. and New Jersey were hit the hardest. Moody’s expects the Federal Emergency Management Agency to reimburse muncipalities for most of the damage.