What happened on AC’s credit rating?
The Wall Street credit rating agency changed the rating for Atlantic City from “CC” to “CCC.”
That’s a good thing, as CC is defined as “highly vulnerable; default has not yet occurred, but is expected to be a virtual certainty.” That means S&P doesn’t see AC as a total lost cause.
CCC, however, is only slightly better. It’s still a “speculative grade” investment and “dependent on favorable business, financial and economic conditions to meet financial commitments.”
And there was this on the rating change, from NJ.com:
The agency, however, also warned that despite assistance from the state, there is still the distinct possibility the city could still default on its debt over the next year and that filing for bankruptcy remains an option down the line.
The city has lots of payments upcoming, per the Press of AC.
The city has upcoming debt-service payments of $675,000 due April 1, $1.6 million May 1, $1.5 million June 1, $3.5 million Aug. 1 and $6.4 million Nov. 1.
New Jersey claims success
New Jersey and Gov. Chris Christie, for their part, claimed that they were the reason for the increased credit rating. And the two things may be linked; things have started to look better since a state takeover of AC late last year.
From a statement from the governor’s office:
“The bump in Atlantic City’s credit rating, like last week’s announcement by Hard Rock that it will purchase and reopen the former Taj Mahal, comes just months after we stepped in to stabilize the city’s troubled finances.
These are early signs our efforts are working, that we will successfully revitalize Atlantic City and restore the luster of this jewel on the Jersey Shore.”
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New investment, casino revenue are helping things
The linchpin of the city coming back in a major way is the casino and resort business. As Christie mentioned, Hard Rock is coming to town in 2018. Just this week, a buyer for the defunct Atlantic Club was found, with the end result being a resort and water park.
But NJ online gambling has helped stem the tide in AC, turning months that would be a revenue decrease otherwise into an increase.