PIMCO: Los Angeles Bond Issuers Can Handle Wildfire Losses
Los Angeles municipal bond issuers are expected to absorb losses caused by recent wildfires without disrupting investor payments, according to PIMCO, a leading U.S. bond fund manager.
PIMCO, which manages $2 trillion in assets, believes that the Los Angeles region's strong financial position will enable it to manage disaster-related losses. The municipality's broad tax base and federal assistance from FEMA will ensure sufficient revenue for debt obligations.
In contrast, the credit profile of the Los Angeles Department of Water and Power (LADWP) has been downgraded due to potential liability claims related to the Palisades Fire. While the risk of missed debt payments is low, investors may demand higher returns on LADWP bonds to account for litigation risks.