Bond Fund Managers Warned of Hidden Risks in Ratings Blind Spot.

Bond investors may be underestimating the risks of climate change on sovereign debt holdings, according to researchers studying the impact of climate change on bond markets. Credit ratings agencies are failing to fully capture the threat that extreme weather shocks pose to bond markets. A high climate-risk score is linked to high default risk, and countries most at risk of climate-related downgrades are often economically vulnerable. Poorer countries may face ratings downgrades in the coming years, making it harder for them to invest in climate adaptation. [Extracted from the article]