WASHINGTON – With one month to go until opening day, Standard & Poor's Rating Services on Friday raised its underlying rating on the District of Columbia's baseball park revenue bonds to BBB+ from BBB.
S&P analysts said the upgrade was based on excess revenues from various pledged sources as well as the expected completion of an ongoing $60 million defeasance, which they projected would lower the maximum annual debt service (MADS) to $41.6 million this year from $44.4 million in 2015 – a drop of roughly 6.3%. Good coverage levels dating back to 2013 also contributed to the upgrade, analysts said.
In its March 4 report, the credit rating agency also projected a stable outlook due to the lack of additional debt plans.
The district issued $456.3 million in ballpark revenue bonds in 2006 to finance the construction of Nationals Park, home of Major League Baseball's Washington Nationals. The ballpark was originally expected to cost around $611 million, but the final price tag was nearly $700 million. The 41,546-seat stadium opened in March 2008 and also hosts concerts and other special events. The bonds were insured by Financial Guaranty Insurance Company.
David Umanksy, a spokesman for District of Columbia Chief Financial Officer Jeffrey S. DeWitt's office, said Monday there are no plans to issue any additional debt for the stadium.
"We issued the whole amount when it first came out," Umansky said. "As far as I know, nothing else is necessary."
The district issued $76 million of taxable series 2006A-2 bonds, $355 million of series 2006-B-1 bonds and roughly $25 million of series 2006B-2 auction rate certificates. S&P said Tuesday their rating report was based on the A-1, A-2 and B-1 series bonds. S&P also rated the B-2 series, but those were defeased with cash by the District of Columbia in fiscal 2014.
The bonds are secured by pledged revenues, which include rent paid to the district by Major League Baseball, a stadium tax, a utility tax and ballpark fee revenues. They are also secured by a $20 million stabilization fund and a surety-funded debt service reserve.
S&P said it could raise the ballpark bonds' rating if pledged revenue collections continue to increase, or, conversely, lower the rating if they decline.
Offsetting factors include a tax revenue stream dependent on stadium events, which S&P analysts said "provides less stability" than other special tax receipts. Still, the agency does not expect any immediate changes to the rating.
"The stable outlook reflects good growth of pledged revenue within the past couple of years that has led to good MADS coverage with no additional bonding plans," analysts wrote in the report. "As such, we do not expect to change the rating within the outlook's two-year time horizon."
In January, the district released renderings for a planned soccer stadium in the Buzzard Point neighborhood to house Major League Soccer's D.C. United. A Nov. 2014 report commissioned by the D.C. Council estimated the cost of the planned 18,000-23,000-seat stadium at $286.7 million.
