Climate Risk Is Reshaping Municipal Bond Credit and Income Opportunities, Nuveen Says
Local governments are increasingly issuing municipal bonds tied to climate resilience projects, creating new opportunities investment firm Nuveen is tracking.
Climate-related risk is increasingly shaping credit conditions in the municipal bond market, with some local governments issuing bonds specifically aimed at funding protections against climate-related hazards, according to Nuveen.
The investment firm has identified areas where it sees potential opportunities for income-focused investors within this shifting segment of the municipal bond market, as governments seek financing for infrastructure meant to withstand extreme weather, flooding and other climate-related risks.
Municipal bonds are debt securities issued by states, cities and other local government entities to fund public projects, and are traditionally viewed by investors as relatively stable, tax-advantaged investments.
As climate risk becomes a more prominent factor in credit assessments, analysts have said municipalities with strong resilience planning could see more favorable borrowing conditions, while those more exposed to climate hazards without mitigation plans could face increased scrutiny from investors.
Nuveen's analysis reflects a broader trend among asset managers increasingly incorporating climate risk factors into fixed-income investment strategies.
Sources
- Climate risk is reshaping muni credit — and income opportunities — CNBC — Top News
EGazette summarizes reporting from multiple sources; follow the links for the originals.
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