Moody’s upgrades outlook on Legends STAR bond debt, keeps B2 rating
6:19 pm, Jul 6, 2012 | Written by bduggan |
Moody’s Investors Services said its outlook on the $80 million in outstanding STAR bonds used to pay for the Outlets at Legends in Sparks is now stable, not negative.
The upgrade was included in a June 28 report, which also reaffirmed the agency’s B2 rating for the Legends. A B2 rating is still considered highly speculative, though only nine investment groups purchased the sales tax-backed STAR bond debt used to finance the 148-acre retail development in Sparks.
“The stable outlook reflects Moody’s expectation that collections will be sufficient to cover debt service requirements over the near-term, especially in light of the recent opening of a Lowe’s store in the district. However, an uncertain economic recovery will continue to be a drag on otherwise improving project performance over the near-term,” according to the report. “Accordingly, sales tax growth will be challenged to overcome the combination of already weak debt service coverage and escalating debt service requirements over the longer-term.”
As a result, Moody’s is projecting a June 2024 default date for the STAR bond debt, though that’s up from June 2018 after Moody’s intial December 2010 ratings report on the Legends.
Last month, the Legends relied on a $27,000 draw from its $8 million reserve fund to make its STAR bond payment, but that’s down from the $600,000 reserve payment it needed in December 2010.