Standard & Poor's Ratings Services has upgraded Atlantic City’s credit outlook to stable from negative due to the municipality’s improved financial position.
“It’s something very positive for the city,” Revenue & Finance Director Michael Stinson said Tuesday. “It will mean borrowing costs will be lower, and that the city’s heading in the right direction, that we are stable.”
The feedback from the ratings agency, which also held Atlantic City’s general obligation rating at A-minus, will “marginally” reduce the interest rate the city fetches next week when it goes to market for a $103 million tax appeal relief bond issuance, Stinson said.
Atlantic City Council agreed last month to borrow the money to pay property tax rebates ordered by settlements for casino appeals cases. That brought the city’s debt to about $220 million.
Although doubled since a year ago, that amount is just one-third of the municipality’s $658 million borrowing capacity established by a formula set by state law, according to city financial documents.
That scenario reflects “adequate reserves” in S&P’s view.
The upgrade reverses recent analyses related to the municipality by S&P, generally viewed as an objective source of analysis of corporate and governmental financial standing.
In April, the ratings agency downgraded Atlantic City’s outlook to negative, citing high unemployment, pending tax appeals, decreasing tax base and reliance on the struggling casino industry.
Although those factors remain, the municipality has since cut its budget and put itself in the position to borrow more money to offset the appeals by paying off its debt relatively quickly, according to a statement released late Monday by S&P.
Moody’s Investors Service meanwhile kept Atlantic City’s outlook at negative in its most recent ranking Oct. 4.
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