The long-term rating on the Casino Reinvestment Development Authority’s (Authority) Luxury Tax Revenue Bonds (Bonds) reflects adequate debt service coverage in each of the five years since the onset of the pandemic. The rating also reflects the narrow revenue base securing the Bonds and the inherent sensitivity of those revenues to regional competition for gaming activity. In KBRA’s view, the credit’s generally healthy historical debt service coverage and favorable legal framework partially offset these concerns. Bondholder protections include a clearly defined gross pledge of revenues, an additional bonds test requiring prior-year revenues equal to at least 1.50x pro forma maximum annual debt service (MADS), and a reserve fund credit facility equal to 1.00x MADS.
The Authority, an instrumentality of the State of New Jersey (the State), was established in 1984 by the state legislature to direct revenues generated by Atlantic City (the City) casinos toward community…
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