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.

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.

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.