ATLANTIC CITY — The city sold $69.8 million in bonds to cover a tax settlement with Borgata Hotel Casino & Spa, state officials announced Wednesday.
The bonds “sold rapidly” at a 4.66 percent interest rate, which is lower than the 6 percent rate for bonds the city sold in 2015, according to the Department of Community Affairs, which is overseeing a state takeover of the city’s finances.
The bond sales will help pay Borgata $72 million for the casino’s successful tax appeals over the years. The city had owed the casino $158 million in property tax-appeal judgments and claims before state officials negotiated a settlement in February.
“Because of the state’s steady hand in managing Atlantic City finances, the city was able to obtain bond insurance and access the capital markets such that the debt was sold quickly and at a low interest rate given the city’s underlying credit,” former U.S. Sen. Jeffrey S. Chiesa, the state’s designee in Atlantic City, said in a statement. “This is great news for the city because the lower the interest rate, the less the city has to pay to bondholders to finance its debt.”
The city had $224 million in bonded debt as of December, according to the city’s most recent debt statement. Most of that debt was used to pay other costly casino tax appeals.
The city has a junk bond rating of Caa3 negative, according to Moody’s Investors Service. In March, Standard & Poor’s increased its rating for the city to CCC from CC.