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KBRA ESG KNOWLEDGE HUB

Ten KBRA-Rated RMBS With Outlier Exposure to Hurricane Ida

Hurricane season

Hurricane Ida made landfall near Port Fourchon, Louisiana, as a Category 4 storm on August 29. The storm, with wind speeds of 150 mph, slowly made its way into Mississippi and was downgraded to a tropical depression with sustained winds of 30 mph as of August 31. According to the National Weather Service, the heavy rain and flooding threat associated with Ida will spread from the Tennessee and Ohio valleys up through the Mid-Atlantic states on September 1. As events continue to unfold, our thoughts are with the individuals and families affected by Ida.

While Ida’s effects are still evolving, Kroll Bond Rating Agency (KBRA) endeavored to identify the potential exposure of our rated universe of residential mortgage-backed securities (RMBS). KBRA’s analysis generally assumed that the most heavily affected regions from the storm are areas throughout the state of Louisiana. KBRA’s findings are as follows:

  • Generally, exposure to properties located in Louisiana is low, with the average exposure for any transaction being just over 50 basis points by current balance.

  • Ten transactions with top exposures, however, have properties comprising between 1.7% and 3.8% of their current balance in the potentially affected area (see Figure 1).

  • Within Louisiana, five Parishes—including the cities of Baton Rouge, New Orleans, Lafayette, and surrounding areas—account for more than half of the exposure area by current balance.

  • Ida’s path directly crossed over these cities, which are some of the more populous and affluent cities in the coastal region of the state (see Figure 2 and Figure 3).


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