Atlantic City’s credit is continuing to spiral downward.
Credit rating agency Moody’s once again cut the debt rating for the New Jersey city to Caa1 from Caa3. This is the third-lowest credit rating from Moody’s and well into junk territory.
The downgrade impacts $16 million of the $345 million of Atlantic City’s debt.
“The downgrade to Caa3 reflects the greater likelihood of default within the next year and higher probability of significant bondholder impairment given an ongoing political stalemate over an Atlantic City fiscal rescue package,” said a release from Moody’s.
“The downgrade also incorporates renewed signals from the state that bondholders will face losses as part of a possible debt restructuring. The Caa3 rating indicates an expected loss to bondholders of up to 35% of principal, in light of the city’s very large structural deficit with limited sources of relief without state assistance.”
New Jersey Governor Chris Christie said in a press conference Monday that the debt is now just as bad as Puerto Rico, which is facing possible bankruptcy. The island also has a rating of Caa1 on its debt from Moody’s.
Business Insider has reached out to Chris Christie’s office for further comment and we will update if we hear back.
More to come…