Wildfire damage in the San Diego region, which by one estimate is in excess of $2 billion, won’t hurt the credit ratings of any of the affected counties, cities and public agencies issuing debt in Southern California, according to a Fitch Ratings statement released Nov. 6.
“While the total property damage is dramatic on an individual basis, the losses are small overall relative to the area’s total taxable property value,” Fitch said.
The costs for the firefighting, evacuation, cleanup and other services may be significant for certain agencies, but most of the costs are reimbursable by the Federal Emergency Management Agency and the state of California’s Office of Emergency Services, Fitch noted.
Among the issuers that did experience some damage, nearly all of the costs, about 94 percent, are covered by state and federal sources, the rating agency said.
Of course, this news isn’t going to change the prospects for certain government agencies at all, such as the city of San Diego. The second largest city in the state has been locked out of the debt markets for about four years after disclosing errors and omissions on bond disclosure documents relating to the deficit of its employees’ pension fund.
The city recently released its 2005 annual audit following the release of its 2003 and 2004 audits, but none of the three rating agencies has changed its ratings on city debt, effectively preventing the city from issuing new bonds.
, Mike Allen