Moody’s Investors Service has downgraded to Baa1 from A3 the New Jersey Casino Reinvestment Development Authority’s $75 million of Series 2004 hotel room fee revenue bonds.
The bonds are secured by a senior lien on a $3 nightly fee imposed on each occupied hotel room — paid and complimentary — in the 12 Atlantic City casinos.
The downgrade “primarily reflects a narrow and deteriorating taxable base” of the casinos, which have experienced significant declines in gross revenues, according to Moody’s.
The rating also reflects what Moody’s called “the lack of an ability to raise the fee, relatively satisfactory security provisions, and adequate coverage currently provided by the revenue stream.”
Moody’s also assigned a negative outlook, which it said reflects challenges the gambling industry faces in Atlantic City, and the potentially negative effect on casino hotel room fee revenues and future debt-service coverage.