ATLANTA -- Florida began its recovery yesterday from the devastation of Hurricane Andrew as Louisiana braced itself for the storm.
Even though the damage from the hurricane may eventually reach $20 billion in the Sunshine State, the municipal market's reaction has so far been subdued.
"It will take a couple of days before anybody can tell the market effect" of the storm, said Robert Lubin, manager of J.J. Kenny Drake's office in Boca Raton. The office re-opened yesterday after being closed during Monday's storm.
Mr. Lubin, who said he has seem no distress selling, noted that the light trading in Florida municipals could be attributed just as easily to the weak overall tone of the market as to the hurricane.
"Everybody [in Florida] is just pretty much trying to pick up the pieces right now," he added.
Hurricane Andrew passed through South Florida on Monday morning, inflicting its heaviest damage in rural Dade County, south of Miami. By late morning, it had passed into the Gulf of Mexico, heading northwest. Boca Raton, which lies on the Florida coast about 50 miles north of Miami, was spared damage. Mr. Lubin said.
"The whole market is down and ugly," a trader in St. Petersburg said yesterday. "I don't see Florida trading any different."
The trader said that a block of Dade County bonds offered for sale in the secondary market yesterday changed hands "at normal levels."
In New York, an official at Kidder Peabody said yesterday afternoon that a decision has not been made on whether to price an $84 million Tampa, Fla., revenue bond issue that the firm is lead managing. The firm had hoped to price the unrated issue today, proceeds of which will be used to build an aquarium.
"The hurricane is one factor that may make us hold off, but there is also the condition of the market and the newness of this transaction," said John F. O'Brien, a Kidder vice president.
Mr. O'Brien also noted that the hurricane may discourage property casualty companies from buying municipals. Insurance companies that have to pay out claims would enjoy fewer profits and thus not feel obliged to buy as many tax-exempt securities to shelter those profits.
Portfolio managers at property casualty insurance companies could not be reached for comment.
Securities firms remained closed yesterday in Florida below Fort Lauderdale on the east coast, according to market participants. And many firms with headquarters in New York said they could not contact their offices in the Miami area.
On the Gulf Coast, meanwhile, residents along a 410-mile stretch of shoreline between Pascagoula, Miss., and Port Arthur, Tex., prepared for the worst.
As of late afternoon yesterday, the center of the hurricane was expected to touch the Louisiana coast sometime around midnight at Grand Isle. La., prompting New Orleans Mayor Sidney Barthelmey to recommend the evacuation of 1.7 million people in and around the city.
In New Orleans, Howard, Weil, Labouisse, Friedrichs Inc. announced that it was closed for the day yesterday, and most other firms in the city could not be reached by telephone.
But trading continued at Scharff & Jones Inc., according to Jack Ryan, a first vice president of municipal underwriting at the firm.
"As you might expect, there was very little happening in Louisiana bonds," he said. "People have other things on their minds today besides municipal bonds."
Mr. Ryan said the office remained open mainly to arrange for delivery of a $46 million New Orleans issue awarded earlier this month. He said the issue would be delivered as scheduled today, using banks outside the state.
Local Florida officials have estimated that property owners may have suffered damages exceeding $20 billion, David Rhea, a spokesman for Gov. Lawton Chiles, said yesterday. Mr. Rhea said harm in the Dade County area alone has bee estimated at about $15 billion. He could not provide an estimate of damage to state facilities. Dade county officials could not be reached to confirm the $15 billion figure.
Mr. Rhea said the 160 mile-an-hour winds devastated areas south of Dade County, but described the damage to cities of Miami and Miami Beach as "moderate."
"This was a terrible storm, but we were extremely fortunate that flooding did not accompany the wind damage and that the hurricane passed through so quickly and spared heavy damage to urban areas," he said.
The Florida official said the storm left 12 dead and 50,000 homeless in the state. Gov. Chiles has so far ordered 2,062 National Guard troops to the disaster area in Dade, Monroe, and Broward counties.