US municipal bond market pricing may be biased by race, unphased by climate risk: Communities with larger shares of Black residents pay more in bond insurance costs, while those with higher physical climate risk do not -- ScienceDaily

PLOS ONEAcross the US, local governments issue municipal bonds to help fund various expenses, such as schools and sewer systems. The risk of investing in a given area's municipal debt depends on that area's distinct characteristics, including its socioeconomic characteristics, and its exposure to climate change.

Statistical analysis showed that credit spreads tended to be larger for bonds issued by communities with a larger proportion of Black residents, adding up to an estimated $900 million cost penalty per year across all Black Americans. This association persisted even after accounting for multiple economic and demographic factors.

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