Ratner's Yards Bonds Rated 'Barely' Investment Grade
On the heels of last week’s eminent domain ruling, Forest City Ratner took another step towards realizing its vision for a basketball arena in Brooklyn when Moody’s Investor Service gave the $500 million in tax free bonds being used to finance the Barclays Center a crucial investment-grade rating. According to a largely positive story in…
On the heels of last week’s eminent domain ruling, Forest City Ratner took another step towards realizing its vision for a basketball arena in Brooklyn when Moody’s Investor Service gave the $500 million in tax free bonds being used to finance the Barclays Center a crucial investment-grade rating. According to a largely positive story in Crain’s yesterday afternoon, “the Baa3 rating reflects several factors, including the strength of New York City as a media market, existing sponsorship support for the team, the large amount of equity the developer and its partner are putting in the project and strong reserve funds.” And check out this quote in The Times from a vice president at Moody’s: The lawsuits are not an issue as far as the rating is concerned. The rating assumes that the lawsuits will be settled and that the project will move forward.” A more skeptical article in the New York Observer noted that while technically investement-grade, the bond rating was only one step above junk level, reflecting significant risk factors like relocation, weak team finances and “uncertain demand for premium seating.” And Atlantic Yards Report points out that the Moody’s rating assumes 225 events per year but Ratner’s on record as predicting only 200. Crain’s says that bond sales are expected to begin sometime this week.
New Nets Arena Wins Another Court Challenge [NY Times]
Moody’s Gives $500M in Nets Bonds Thumbs Up [Crain’s]
Nets Arena Wins Needed Bond Rating, Mostly [Observer]
Atlantic Yards Debt Gets Rated [The Bond Buyer]
FtGreeneCorey, you just beat me to it! But yes, I agree. The Nets will be an exciting team in 2010-2011 and beyond.
Good point about Yankee Stadium/ Citi Field.
The Nets are an up-and-coming team. I know that sounds silly on its face given their record, but they have a lot of very good and very promising first, second and third year players. The reason they suck is that they have intentionally starved their team for money the last two years and not signed any big name or veteran players.
The reason being: this off-season, they will have more cap space than any team in the NBA to go after what will be the best free agent class in the last 15 years.
As a basketball fan– and not a citizen– I am definitely looking forward to how this team comes together over the next couple years.
The fact that the bond are “barely” investment grade is irrelevant…they are investment grade….period. This is the rating that FCR and Goldman Sachs realistically hoped to get and they got it, and the same rating, oh by the way, that the new Yankee Stadium and Citi Field received. The bonds will sell. They fact that the team is 0-18 is also irrelavant. The Nets have been clearing salary cap room for years in order to be a contender by the time they get to Brooklyn. Lebron or not, they are in a position to make a serious run at Dwayne Wade, Chris Bosh and Amare Stoudemire in 2010, and Carmelo Anthony in 2011. By the time they get here, they will be a playoff caliber team…no doubt.
Well, if the Nets are losers, then DDDB should love them!!
How’s their track record in court?
The question is what are the taxpayers of New York PAYING to RENT an 0-18 team?
Answer – several times what it would cost to buy the actual team outright. Thanks Bloomberg. More welfare for billionaires.
Go Nyets.
oh goodie, just what that crowded area of Brooklyn needs, a basketball arena.
CG – yeah, just looked at the Bond Buyer article. Backed by PILOTS generated by stadium revenues.
aren’t the nets 0-18? they’re off to the worst start in NBA history!
fqrg – the rating is important bc it determines the cost of funding/financing. the lower the rating, the more expensive the interest they are paying on the debt.
jessi – would guess these are senior unsecured, no? if they are secured, then this is an extra crappy rating. would think that if they are secured though, it would be by the assets (the actual land/project).