Convention Center Maintains AA+ Bond Rating
NEW ORLEANS – The Ernest N. Morial New Orleans Exhibition Hall Authority announced that it has maintained its AA+ bond rating from Fitch Ratings on two separate tax bonds, one issued in 2012 for $26.4 million and one issued in 2014 for $33.6 million. Fitch is a global provider of financial information services, including credit ratings, that provide insights for investors in long-term debt. The AA+ bond rating is nearly its highest.
From Fitch: “Affirmation of the ‘AA+’ reflects a solid resilience cushion when applying both sharply lower 2020 pledged revenues and Fitch’s tourism sector revenue stress, expected strong post-pandemic pledged revenue growth, and sizeable reserves available to support debt service payments in the event of further pledged revenue declines.”
Fitch said the “rating outlook is negative” because of continued uncertainty regarding the timing and strength of the rebound of the tourism industry in New Orleans and the corresponding recovery in pledged tourism-related taxes. The credit rating agency said factors that could lead to positive rating action/upgrade include the absence of additional leveraging and a sustained recovery in New Orleans’ tourism industry. Conversely, a prolonged and/or weak recovery and “pledged revenues or substantial additional leveraging that would erode the currently solid resilience cushion” could lead to negative rating action or a downgrade.
“We are pleased and encouraged that Fitch has chosen to maintain a rating of AA+ for our outstanding bonds, and to hold its opinion of our credit rating,” said Michael J. Sawaya, executive vice president of the Authority and Convention Center president in a release. “Our July 15 debt payment has been reserved and is held by a trustee; therefore, it will be paid per schedule from taxes collected. It is important to note that the Authority is in compliance with all of its bond covenants, and given these very uncertain times, this rating is a tribute to how well the Authority has managed its funds.”
“Regarding the ‘negative outlook’ rating, we remain hopeful about the state of the local tourism economy and will continue to monitor the trending effects on our tax collections.”