Credit rating agency Standard & Poor’s said Thursday that while it is still watching Atlantic City’s credit closely, it now believes the municipality “is unlikely to pursue bankruptcy as an immediate course of action.”
Emergency Manager Kevin Lavin told The Press in March that a municipal declaration of bankruptcy was not something he and former consultant Kevyn Orr were considering.
“The Emergency Manager’s report reflects several possible solutions to the city’s fiscal 2015 deficit that are both recurring and one-time in nature,” said Lindsay Wilhelm, S&P’s lead Atlantic City analyst — among them “debt service and other payment deferrals,” according to the agency.
“Ultimately, for the city to stabilize and improve, it must implement recurring and ongoing measures,” Wilhelm said. “However, short-term solutions can provide a financial cushion in operations while the city makes long-term adjustments.”
Wilhelm cautioned the agency still sees “some risk with short-term solutions, which, if not successful, could introduce bankruptcy as a potential course of action.”
S&P said the city’s challenges include repaying a $40 million loan from the state, refinancing $12 million in bonds due in August and successfully “negotiating with other key stakeholders to address its near-term financial and liquidity pressures.”
In late March, S&P said it was reexamining the city’s credit following the release of Lavin’s report.
And after Lavin’s appointment in January, S&P downgraded the municipality’s credit to BB, which it defines as an investment “less vulnerable in the near-term but (which) faces major ongoing uncertainties.”
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