The Potential Impact of Hurricane Harvey on Investment Grade Issuers

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September 2017 IG Credit Insights

David Morse, CFA

David Morse, CFA - Managing Director of Global Credit Strategies & Head of Credit Research

As the damage done by Hurricane Harvey continues to add up, it will almost surely rank as the most costly storm in US history, possibly exceeding the combined costs of hurricanes Katrina in 2005 and Sandy in 2012. While the federal government isn’t expected to release its initial estimate of Harvey’s harm until October 6th, efforts to assess the storm’s economic impact are well underway. Harvey is expected to reduce third quarter GDP by approximately 0.25%. However, the massive recovery work that is now required will boost economic output in the near and medium terms. Meanwhile, the environmental havoc wreaked by the storm may have the positive effect of reducing the political turmoil in Washington that threatens to produce a government shutdown in September. The need to sustain federal relief efforts is putting significant pressure on both the Trump administration and Congress to strike a deal regarding the federal debt ceiling and keep the government operating.

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