Moody’s: Takeover prevents Atlantic City default through ’17

Atlantic City (Alan Tu/WHYY)

Atlantic City (Alan Tu/WHYY)

A Wall Street ratings firm says New Jersey’s takeover of Atlantic City’s assets and major decision-making power should prevent the struggling resort from defaulting on its debt at least through the end of next year.

Moody’s Investors Service says the takeover should be enough to head off any default on the resort’s $500 million in debt through the end of 2017.

New Jersey seized control of Atlantic City earlier the month after rejecting the city’s own proposed turnaround plan.

Former U.S. Senator and state attorney general Jeff Chiesa assumed broad powers under the takeover.

The agency also noted that the state explicitly ruled out a bankruptcy filing for Atlantic City, and rates the takeover as “a crucial step.”

The city has been struggling as its casino industry shrinks.

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