Atlantic City Cut Deeper Into Junk by S&P Expecting Defaultby
Credit rater says default or restructuring virtually certain
Bondholders offered little protection in bailout, S&P says
Atlantic City’s credit rating was cut deeper into speculative grade by S&P Global Ratings, which said a default or a debt restructuring in the distressed New Jersey gaming hub was a virtual certainty.
The New York-based company lowered the grade one level to CC, two steps before default. S&P said it could cut it again since it’s uncertain how Atlantic City could meet its obligations.
Atlantic City Mayor Don Guardian, while meeting May debt obligations on Monday, said he couldn’t guarantee making bond payments in June. State lawmakers have advanced contrasting approaches to rescue the seaside resort town.
Even if the city does receive "extraordinary support" from the state, that may not prevent bondholder losses, S&P said.
“We also view the city’s ability to meet its financial commitments in the long term to be unsustainable,” S&P said.
Atlantic City, which once had a monopoly on gambling on the East Coast, has been veering toward insolvency since a third of its betting parlors closed in 2014. Other casinos have successfully challenged the size of their tax bills, causing the city’s property-tax base to tumble by more than two thirds since 2010, according to Moody’s Investors Service.