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May 7, 2009

Mets Alerted on Citi Field Bonds

The New York Times
by Ken Belson

The Mets’ trouble on the field may not be the only headache for the team. Higher interest rates may be on the horizon, too.

On Wednesday, Moody’s Investors Service said that $613 million worth of the municipal bonds that were issued to pay for the construction of Citi Field could be downgraded to junk status.

Moody’s cited the recent downgrade of Ambac Assurance Corporation, which was hired to guarantee that bondholders are made whole in the event that the Mets miss a debt payment. Now that Ambac has been downgraded to junk status, it is theoretically less able to meet its obligations. ...

The 40-year bonds sold in August 2006 have a coupon rate of 5 percent. They are rated by Moody’s at Baa3, the lowest investment grade. If they are downgraded to below investment grade, or junk, the team may have to pay higher interest rates if it issues new debt.

article

NoLandGrab: The downgrading of the Mets' bonds can't be welcome news for Forest City, which hopes to issue about $800 million worth of bonds in order to build the Barclays Center. As Gari N. Corp, Gumby Fresh's pseudonymous blogger, posted in a comment on Atlantic Yards Report last month:

There's one bond insurer left that could do the deal - FSA/Assured Guaranty (they're merging). I'm fairly certain it has less than no interest in doing the Nets bonds. But even FSA/Assured no longer has a pristine rating. I still don't see how a financing of over maybe $400 million gets done....

Posted by eric at May 7, 2009 3:33 PM