Moody's Warns Mets That Citi Field Bonds Could Be Downgraded

Moody's Says $613M Of Citi Field Bonds Could Be Downgraded To Junk Status

Moody's Investors Service yesterday said that $613M worth of municipal bonds issued to pay for the construction of Citi Field "could be downgraded to junk status," according to Ken Belson of the N.Y. TIMES. 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 Mets said in a statement, "This is related specifically to Ambac and is not reflective of anything else related to club business or the strength of the underlying credit. It has no impact on our operations." Moody's Associate Analyst Andrew Cleary said that Moody's "did not foresee the Mets missing any interest payments, but the team will have to decide how to compensate for Ambac's weaker rating." Belson notes if the Citi Field bonds are downgraded to "below investment grade, or junk, the team may have to pay higher interest rates if it issues new debt." Moody's noted that another $82.28M worth of bonds issued this year were "not in danger of being downgraded" (N.Y. TIMES, 5/7). Traders said that investors "trying to bail out of their 2006 stadium bonds, which pay 5[%] for the next 34 years, are finding narrow exits." The bond yesterday was selling for $0.79 on the dollar with the yield at 6.5%, while two weeks ago it was getting $1.10 on the dollar with a yield of 5.08% (N.Y. POST, 5/7).