The Las Vegas Monorail Co. continues on its one-way journey toward default, according to Fitch Ratings, which Monday downgraded its underlying rating on the monorail operator’s first-tier debt to C from CC.
A C-category rating means that default of some kind appears imminent or inevitable, according to Fitch.
The four-mile long elevated train connecting some Las Vegas strip hotels has been built, owned and operated by the nonprofit corporation, which financed construction with tax-exempt revenue bonds issued in 2000 through the Nevada Department of Business and Industry.
Since it opened in 2006, ridership has come up well short of projections.
The project’s scheduled July 1 debt service payment is greater than what is left in the bonds’ debt service reserve, which means that the status of the first-tier bonds’ insurer, Ambac Assurance Corp., will come into play.
Fitch no longer rates Ambac, which carries a Ba3 rating from Moody’s Investors Service and was downgraded to BBB from A Wednesday by Standard & Poor’s, which said the company is “effectively in runoff.”
Fitch’s action this week affects $451.4 million of outstanding first-tier bonds. There are also $198 million of second- and third-tier bonds that are neither rated nor insured.
Wells Fargo Bank NA is trustee.
Moody’s dropped its underlying rating on first-tier monorail debt to Ca from Caa2 in April.
