Moody's Investors Service warned business leaders on Thursday of possible debt defaults in Atlantic City, a city which has recently struggled with decline in tourism and the resort hotel industry.
On Wednesday, Standard & Poors announced that it was considering downgrading Atlantic City's debt rating from its current junk bond status, after state officials announced in a report the possibility of mass layoffs and cutbacks in the city's budget.
"Without an extension of a state loan, the city will need to access the capital markets by March 31," Moody's said in its own report.
"Given the city's cash flow projections and assuming pension and health benefit payments are delayed or deferred, the state legislature will have only three months to adopt the two bills before the city reaches a liquidity and debt service crisis," said Moody's.
The bond credit rating business added that debt service payments due on August 1 and December 15 are at risk and that their finalization depends on the passing of the legislation.
Currently, the troubled New Jersey beach city has $344 million of outstanding long-term general obligation debt and $397 million of total debt.
Last December, the New Jersey Division of Gaming Enforcement announced step-by-step plans for the business' shutdown of the Taj Mahal casino, owned by the Trump Entertainment Resorts Inc.
The immigrant communities of south New Jersey have been especially affected by the resort hotel closures.
"Many of these foreign-born workers had already immigrated to the United States in pursuit of economic opportunity (in the 1990s), and moved to Atlantic City from larger urban areas," Richard Stockton College economics professor Ellen Mutari said in an analysis of the region's declining casino sector, the Press of Atlantic City reports.
