HARTFORD, Conn. – The lease-revenue bonds that funded the stalled minor-league baseball stadium in Hartford, Conn., could be a good speculative buy for investors with an appetite for risk, said Richard Larkin, director of municipal credit analysis for Stoever Glass & Co.
The Hartford Stadium Authority issued the bonds in 2015, with a Feb. 1, 2042, maturity date, to build the 6,000-seat Dunkin' Donuts Park just north of downtown. S&P rates the ballpark project, now BBB-minus, just above junk.
The city itself is staggering from four-notch downgrades the past six weeks from S&P Global Ratings and Moody's Investors Service, and Mayor Luke Bronin has said the city could soon be insolvent.
According to Larkin, this raises doubt about the city's contingent backstop.
"These [stadium] bonds are not suitable for conservative investors," said Larkin. "However, they may represent an income opportunity at today's low prices since the city's rating downgrades of the last month by S&P and Moody's.
"Ultimately, investors would have to believe that the state would somehow intervene if default risk increases. That is not an unreasonable assumption."
Completion was expected by this year's opening day for the Class AA Eastern League's Hartford Yard Goats – the former New Britain Rock Cats – but cost overruns and construction delays have made even a 2017 opening day doubtful.
The team was not able to play a single home game in 2016, playing some 40 miles away in Norwich and others in opposition team ballparks.
Bronin on Tuesday told reporters that the city finalized an agreement for surety provider Arch Construction Co. to oversee ballpark completion. He said the city would draw from most of its $4.4 million stadium account but provide no additional funds.
"Arch insures the project, but does not guarantee debt service," said Larkin. "If Arch cannot complete on time, the city would probably be able to recover some damages from Arch, which would not guarantee timely debt repayment."