ATLANTIC CITY — Moody’s Investors Service recently upgraded the resort’s credit rating signaling increased confidence in the municipality’s ability to repay long-term debts.
Moody’s, which supplies investors with research for stocks, bonds, and government entities in addition to providing credit ratings and risk analysis, on Sept. 12 declared that the city has a positive outlook and increased the municipality’s long-term issuer rating to Ba2, up one step from Ba3.
Mayor Marty Small Sr., in a prepared statement, touted the increase as a reflection of his leadership.
“This independent Wall Street agency validates all the hard work my administration puts in as it clearly states one of the reasons for the positive outlook and upgrade is improved management,” said Small. “This demonstrates the tremendous work of my budget team, which includes local and state personnel.”
According to Moody’s Long-Term Rating Definitions, “obligations rated Baa are subject to moderate credit risk. They are considered medium-grade and as such may possess speculative characteristics.” For more information about Moody’s rating scale and definitions click here or the link below.
Generally, the higher a municipality’s credit rating, the less it will pay in interest to borrow money for long-term investments such as road improvements and infrastructure projects. The lower the credit rating, the higher the interest to pay off bonds, which translates into fewer available funds for important programs.
“We view the continued oversight by the State of New Jersey as critical to the city’s well-being and progress,” the Moody’s report said. “The state’s future oversight role remains to be determined and will be of critical importance to the city’s future credit quality.”
Moody’s also said that many of the city’s primary credit characteristics are still weak. For example, there is a high rate of unemployment, resident wealth and income are low, and income inequality is evident, according to the report.
Still, the firm anticipates the resort’s circumstances will improve.
“The positive outlook reflects our expectations that, despite the lingering effects of the pandemic, the rise of inflation and the risk of recession, Atlantic City will continue making strides in improving its governance and finances,” the report said. “While the economic headwinds have caused issues, the negative credit consequences are offset by the improved management of city operations. The outlook also incorporates the continued state oversight.”
Atlantic City Chief Financial Officer Toro Aboderin said the city would keep working to make things better.
“We promise to continue putting forth these efforts in hopes of obtaining additional upgrades from rating agencies,” Aboderin said.
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