- Missed payment would be first in state since Great Depression
- New Jersey, city leaders divided over state assistance
Atlantic City Mayor Don Guardian said he hasn’t decided yet whether to make interest payments on municipal bonds due May 1 with New Jersey lawmakers locked in a stalemate over providing state assistance to the troubled gambling hub.
The city owes $1.8 million for tax-exempt bonds sold in 2012 to fund settlements with casinos over their taxes. The securities are insured by Assured Guaranty, which would be obligated to pay holders interest on the bonds. Guardian had said in March that he would make the payment.
"He has to take everything into consideration," Chris Filiciello, his chief of staff, said Tuesday when asked how Guardian will decide.
Atlantic City is mulling what would be the first default for a New Jersey municipality since the Great Depression. It has already lengthened pay periods for its workers to avert a shutdown of services as it tries to stave off insolvency. Governor Chris Christie’s rejection of measures that would have diverted gambling funds to the city created a $33.5 million hole in its budget. Christie and state lawmakers have yet to agree on a plan to rescue the 39,000-resident seaside town.
A city bond scheduled for a May interest payment traded Friday with an average yield of 3.7 percent, or 1.7 percentage point over benchmark munis, less than the 2 percentage points average since January, data compiled by Bloomberg show.
“As always, investors that hold bonds insured by Assured Guaranty can be certain they will continue to receive full and timely payment of scheduled debt service when due,” Robert Tucker, a company spokesman, said in a statement.