Things are looking better for Atlantic City thanks to oversight of its government operations by the state of New jersey according to Moody’s Investor Services.
While the credit agency affirmed Atlantic City’s Ba3 credit rating Tuesday, it also changed the city’s outlook from stable to positive.
That change was due in part to the state helping to city deal with debt and financial challenges from the Covid-19 pandemic which has caused declining revenue at the city’s nine casinos, according to an analysis of the report by the Press of Atlantic City.
While the city’s credit rating remains below investment grade, the new outlook introduces the possibility of an upgrade in the next 12 to 24 months, the agency said.
“The new, positive outlook reflects our expectations that, despite the pandemic, Atlantic City will continue making strides in improving its governance and finances,” according to the Moody’s report. “While the pandemic has negatively impacted the casino industry, the negative credit consequences are relatively offset by the improved management of city operations and the more predictable PILOT (Payment In Lieu of Taxes) payment structure for casinos.”
Atlantic City has been under state oversight since 2016 with the passing of the Municipal Stabilization and Recovery Act, which is set to expire. Moody’s said reports that the act may be extended helped with the positive outlook.
“The state’s future oversight role remains to be determined and will be of critical importance to the city’s future credit,” the Moody’s report stated.
The report also said that the fiscal effects of COVID-19 restrictions on Atlantic City’s casinos highlighted the city’s “critical need for diversification,” of its economy.
