Texas Drought Forces Small Town to Default on Water System Debt.

A persistent drought in Texas has caused a small town called Clyde to default on its water system debt. The city, located between Dallas and Midland, informed investors that it couldn't make a debt payment due in August. As a result, its bond insurers were asked to cover the payment. This rare instance of climate-related default has led to a downgrade in the city's credit rating. The drought has also affected the town's water sales and led to the implementation of water usage restrictions. While bondholders will be protected due to insurance, this situation highlights the risks associated with extreme weather events in the municipal bond market. [Extracted from the article]