Trading Patterns of North Carolina Water Bonds Pre- and Post-Hurricane

<span style="font-weight: 400;">Public water systems are increasingly turning to the private market for capital. Bond rating agencies and bondholders have uncertain and changing perceptions of the financial risk of extreme weather events. Adaptation strategies may be better informed if bond issuers funding water can anticipate changes to their credit rating and borrowing costs. This work seeks to measure the patterns of price changes in the secondary market of water-linked municipal bonds in North Carolina. I measure changes to both the variance and the mean price, grouped by both issuers and bonds, in the pre- and post-storm periods of four major storms in the state. I find water-linked bonds issued in counties that received FEMA Public Assistance aid were penalized in their post-storm mean trading price when grouped by security description (-$0.85, p = 0.027) and maturity-specified bond (-$0.59, p&lt; 0.001). In contrast, no statistically significant penalty for bonds from aid-receiving counties was incurred when grouped by issuer.</span>