Moody’s upgrades Atlantic City gambling industry outlook to positive

Moody’s Investors Service, the bond credit rating business, has upgraded the outlook for Atlantic City’s gambling market from stable to positive, despite affirming its Ba3 credit rating.

A credit rating of Ba3 is below investment grade; however, the market’s new positive outlook suggests upward momentum. The company has also suggested there could be a further outlook upgrade in the next 12-24 months.

Moody’s said the new rating reflects fiscal improvements in the market. The company expects Atlantic City will continue to improve its governance and finances, despite the detrimental impact of the pandemic.

According to Moody’s, the negative consequences of the pandemic have been offset by the improved management of the city and a more suitable Payment In Lieu of Taxes structure for casinos.

Data from the investors service shows Atlantic City currently has $352.7m in general obligation unlimited tax and guaranteed debt.

“The Ba3 long-term issuer rating reflects the city’s continued, albeit reduced, financial and economic stress,” explained the company in regards to the city’s continued Ba3 rating.

Last month, Moody’s said it believes measures introduced across the US to help limit the spread of COVID-19 are “credit negative” for the gambling industry.

The company said temporary closures to prevent the spread of COVID-19 in Illinois, Rhode Island, Detroit (Michigan) and Philadelphia (Pennsylvania) could be “just the tip of the iceberg.” However, Moody’s did indicate that casinos have performed “better than expected” since reopening.

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