Things can change quickly in the financial world and suddenly, Atlantic City is seeing a rise in its municipal bond ratings.
Standard & Poor’s gave an A- rating to $43 million in bonds the municipality plans to sell. The rating is applied to investments S&P considers to have a “stable outlook.”
“It’s very good news for the city,” Michael Stinson, city finance director, told the Press of Atlantic City, saying it will help the municipality secure a more favorable interest rate when it tries to sell about $55 million in bonds later this month.
S&P analysts said that while Atlantic City is still struggling, the ratings agency now believes the resort “is unlikely to pursue bankruptcy as an immediate course of action.”
The higher rating also reflects state support Atlantic City secured through the New Jersey Qualified Bond Assistance Act. Under the act, New Jersey agrees to divert a portion of future aid to cover specific municipal bond payments.
The city borrowed $40 million from the state in December at a 0.75 percent interest rate. In February, it sold $12 million in bonds at a 5 percent interest rate.
Stinson told the Press the bond sale the city plans to attempt this month would be used to pay back those loans.
The Borgata Hotel Casino & Spa, however, has sued to block the city from repaying those loans without also paying back the casino about $88 million for past tax overpayments. That case is still pending.
