June 29 (Bloomberg) -- The Minnesota Twins transferred $4 million to a debt-service fund for their new stadium after high interest rates caused by 2008’s credit-market turmoil drained an account devoted to paying off the bonds.

The account originally contained enough to pay debt service on the bonds until one month before the Major League Baseball team’s ballpark is schedule to open in April 2010, according to a report by Standard & Poor’s Rating Services. The credit-market squeeze drove interest rates up, and a hedge wasn’t enough to make up the difference.

After the transfer, the account “will likely be sufficient to pay debt service approximately until the projected opening date,” the report said. The rating service affirmed BBB- ratings on $40 million in bonds due in 2021 and $20 million in bonds due 2023, one level above high-yield, high-risk junk bond status.

The Twins have sold about $210 million in bonds to pay for the their share of Target Field, a $535 million, 40,000-seat ballpark. Hennepin County agreed to contribute $350 million.

About 60 percent of the team’s debt carries variable rates with an “imperfect hedge” that leaves the MLB team exposed to rising interest costs, Standard & Poor’s said.

The team has sold about 80 percent of the stadium’s luxury seats and about half of its corporate sponsorships, though selling the remaining inventory may be difficult, the rating service said.

“The project has additional funds from deposits for suites and club seats and from owner capital contributions to fund the interest payments until the project opens, ensuring there is no cash-flow shortfall caused by the increased interest costs,” the report said. “However, overall interest costs will be higher than the pro forma.”

During the credit squeeze in October, the average top- rated, 10-year, fixed-rate bond paid 4.71 percent compared with 3.17 percent on June 26, according to Municipal Market Advisors of Concord, Massachusetts.

To contact the reporter on this story: Aaron Kuriloff in New York at akuriloff@bloomberg.net.

Last Updated: June 29, 2009 13:14 EDT