Bangkok--17 Mar--Standard & Poor's
Standard & Poor's Ratings Services assigned its 'AA' rating, with a stable outlook, to Las Vegas, Nev.'s general obligation (GO) (limited tax) performing arts center bonds (additionally secured by pledged revenues) series 2009. At the same time, Standard & Poor's affirmed its 'AA' underlying rating (SPUR) on the city's outstanding GO debt.
Credit strengths supporting the rating include continued strong reserve levels; additional liquidity represented by a newly created special reserve in the form of a revenue stabilization fund of $47 million; strong financial practices and policies and an experienced, stable, and proactive management team; despite mostly negative economic trends over the last one to two years, the city's strong long-term fundamentals; and continued low debt.
Offsetting credit concerns include a projected decline in consolidated taxes through fiscal 2010; a projected decline in the city's unreserved fund balance to 8% by 2014; substantial impacts related to the real estate market; significant impacts related to the local economy downturn and tourism; continued employment concentration in gaming, hospitality and leisure; and a significant increase in unemployment.
The bonds constitute direct and general obligations of the city, secured by a pledge of the city's limited ad valorem taxes, subject to statutory limits on overlapping taxes of $3.64 per $100 of assessed value.
"We expect that the city will continue to prudently manage its finances and make additional appropriate budgetary adjustments, if or as needed, to maintain its strong reserve position, said Standard & Poor's credit analyst Paul Dyson. "The local Las Vegas economy's recent significant downturn is a credit concern, but we believe the city's long-term strong economic fundamentals still hold true, including the city's (and county's) reputation as one of the leading national and international tourism and entertainment destinations."
After several years of very strong economic growth as indicated by virtually every measure, the Las Vegas metropolitan area has seen a significant downturn very similar to the softness that occurred in late 2001 and 2002 after the events of September 11. In the spring and summer of 2008, the city took note of the declining economic and financial conditions and proactively made significant adjustments to general fund expenditures.
Complete ratings information is available to RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; select your preferred country or region, then Ratings in the left navigation bar, followed by Find a Rating.
Media Contact:
Ana Sandoval, New York (1) 212-438-5095, [email protected]
Analyst Contacts:
Paul Dyson, San Francisco (1) 415-371-5079
Ian Carroll, San Francisco (1) 415-371-5060
Key Contacts:
Americas Media Relations: (1) 212-438-6667
media_ [email protected]
Americas Customer Service: (1) 212-438-7280
[email protected]