Atlantic City default would negatively impact other N.J. cities, Moody's says
TRENTON -- Gov. Christie’s statement last month that Atlantic City’s bondholders are “going to have to make sacrifices” to help stabilize the resort town’s finances “calls into question the state’s future willingness to support” other financially distressed municipalities, a Wall Street credit agency said Wednesday.
Moody's Investors Service said Christie's comment, in an interview March 24 with an Atlantic City radio station, "provides another indication that the state is considering impairing the city's general obligation (GO) bondholders, whether through a negotiated debt restructuring or possibly a Chapter 9 bankruptcy filing."
A default would negatively affect the credit of cities such as Newark, Paterson, Salem, and Irvington, among others, Moody's said. The credit agency downgraded Atlantic City's general obligation debt rating this week, citing the possibility of a default this year and a political stalemate in Trenton.