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by Ed Beeson
November 20, 2013
Atlantic City’s financial woes took a turn for the worse today when a Wall Street rating agency cut its credit quality in the face of declining gaming revenue and hefty losses from casino tax appeals.
Moody’s Investors Service downgraded the city’s credit rating one notch to Baa2 and assigned it a negative outlook.
The agency, which monitors the Atlantic City’s ability to repay its bonds, said it expects the city’s tax base will shrink further as competition from casinos in neighboring Pennsylvania continues to siphon gamblers and prompt new tax appeals.
Gambling revenue in Atlantic City has fallen from $5.2 billion in 2006 to just over $3 billion last year.
The new rating affects $219 million in general-obligation and city-guaranteed bonds. It is just two notches above junk-bond territory, and well below the A1 rating the city had three years ago, before its last downgrade.
Moody’s rating change comes a month after a state tax court judge handed the city a loss in an appeal filed by The Borgata Hotel Casino & Spa. It also follows a Nov. 6 bankruptcy filing by the Atlantic Club, which is seeking a buyer….
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Contact: Michael Murphy