ATLANTIC CITY, NJ—On Friday Moody's Investors Service downgraded Atlantic City's general obligation debt to a Caa1 rating, which indicates that there is a “high risk of default” over the next five years.
The rating downgrade came a day after New Jersey Gov. Chris Christie installed an emergency management team to manage the city's finances. Moody's reported that the downgrade was in response to Gov. Christie's naming of the emergency management team that is headed by corporate finance attorney Kevin Lavin.
Atlantic City currently has $344 million of outstanding long-term general obligation debt and $397 million of total debt, according to NJ.com.
"The top ten taxpayers, all of which are casinos, made up a significant 68% of the taxable base in fiscal 2013, which represents an extremely high level of concentration in one industry," said Moody's.
Atlantic City's tax base declined by 45% between 2008 and 2014. The city expects that by 2016 its assessed values will fall from 2014 levels by another 38% due to four casino closures last year. See story at NJ.com.
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