Press Release|Public Finance
KBRA Affirms BBB+ Rating for Casino Reinvestment Development Authority, NJ Luxury Tax Revenue Bonds
4 Jun 2024 | New York
KBRA affirms the long-term rating of BBB+ with a Stable Outlook for the Casino Reinvestment Development Authority, NJ Luxury Tax Revenue Bonds.
Key Credit Considerations
The rating was affirmed because of the following key credit considerations:
Credit Positives
- Pledged revenues experienced favorable growth in the years preceding the pandemic and have recovered to levels providing more robust, consistent debt service coverage in each of the last three years.
- Clearly defined pledge of revenues and cash funded debt service reserve fund.
Credit Challenges
- Pledged revenues are limited in scope and sensitive to the success of gaming/entertainment/tourism industry, which is both cyclically sensitive and subject to evolving competitive pressures. Further, pledged revenues are highly seasonal and remain susceptible to event risk.
- Evolving competitive environment with respect to regional casino operators and online gaming/wagering may weigh negatively on pledged revenue performance over time.
Rating Sensitivities
For Upgrade
- While an upgrade is not anticipated, significant growth and diversification in the taxable base over time could precipitate upward rating movement.
For Downgrade
- A secular decline in luxury tax revenues resulting in significantly narrower debt service coverage.
- Additional borrowing resulting in significantly lower debt service coverage.
To access rating and relevant documents, click here.