Atlantic City, New Jersey, the onetime U.S. East Coast gambling capital losing as many as five casinos this year, had its credit rating cut one level to BBB+ by Standard & Poor’s.
The reduction, from A-, puts the city’s general-obligation debt three steps above junk. Moody’s Investors Service on July 23 assigned a junk-level Ba1 rating, down two steps from Baa2, on $245 million of general-obligation debt. The outlook is negative from both ratings companies, which means it may face further downgrades.
“The downgrade and negative outlook reflect our opinion of the revenue and potential liquidity pressures that the city faces following the closing of four of its 12 casinos, two of which are in bankruptcy,” S&P analyst Lindsay Wilhelm, based in New York, wrote in the report.
Trump Plaza, Caesar’s Entertainment Corp.’s Showboat, Revel and the Atlantic Club, all battered by out-of-state competition, closed this year. Trump Taj Mahal may shut in November, leaving the city with seven casinos.
Republican Mayor Don Guardian and his spokesman, Christopher Filiciello, didn’t immediately respond to a phone message left at their office.
The casinos’ successful tax appeals forced an almost 30 percent increase this year on residential property levies.
“We believe, and officials also acknowledge, that rate increases of this magnitude are unsustainable and they are looking to alternative sources of revenue and substantial expenditure cuts,” according to the the report.
Governor Chris Christie, 52, a Republican in his second term, met behind closed doors on Sept. 8 with political leaders and casino officials on ways to build Atlantic City revenue on non-gambling attractions including entertainment and retail. The city is four years into Christie’s five-year turnaround effort, including more marketing, policing and tax breaks, that hasn’t taken hold.
Christie’s spokesmen, Kevin Roberts and Michael Drewniak, didn’t immediately respond to an e-mailed request for comment. Christopher Santarelli and Joseph Perone, spokesmen for the state treasury, also didn’t respond to an e-mail.
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