Moody’s Investors Service downgraded the general obligation bonds of Atlantic City, New Jersey to “junk” status on Wednesday, citing the struggling casino town’s declining tax base.
The credit rating service cut the city’s underlying rating to “Ba1” from “Baa2.” It affects $245 million in outstanding debt.
Also, this from Bloomberg:
Atlantic City, New Jersey, the gambling hub that’s been pummeled by regional competition in the U.S. Northeast, had its credit rating cut two levels to speculative grade by Moody’s Investors Service.
The reduction to Ba1 from Baa2 on the city’s $245 million of general-obligation debt reflects a weakened tax base resulting from anticipated casino closings, the New York-based ratings company said today in a statement. The outlook remains negative.
“The downgrade to Ba1 reflects the city’s significantly weakened tax base, revenue-raising ability and broader economic outlook,” analysts Vito Galluccio and Julie Beglin said in the statement. “These result from ongoing casino revenue declines, expected near-term casino closures, and the impact of sizable casino tax appeals, all of which has stemmed from increased competition from casinos in neighboring states.”
I went through Atlantic City a couple of weeks ago. It was an absolute tragedy of a city. Even the tourist areas of the city were threadbare and, frankly, someplace I wouldn’t care to engage in recreation. Frankly, it made the seediest parts of Baltimore look upscale and gentrified.
Terrible waste. An embarrassment for the rest of NJ.