Stacie Sherman, Bloomberg · January 27, 2015 at 8:21 pm
(Bloomberg) — Atlantic City, New Jersey’s struggling gambling hub, had its credit rating cut to junk by Standard & Poor’s because of Governor Chris Christie’s appointment of an emergency-management team to oversee its finances.

The four-level cut, from BBB+ to BB, on Tuesday follows a similar move on Jan. 23 by Moody’s Investors Service, which cited the same reason. Moody’s cut its grade six levels to Caa1, five steps below S&P’s lowered rating.

The reduced credit ratings follow the Republican governor’s decision this month to appoint over the city a management team that includes Kevyn Orr, who shepherded Detroit through its record $18 billion municipal bankruptcy. Orr will serve as a consultant, with Kevin Lavin taking the role of emergency manager.

The order “requires the emergency manager to prepare and recommend a plan, within 60 days, to place Atlantic City’s finances in stable condition and provides the explicit authority to use any and all lawful means, including restructuring the city’s operations and adjusting its debts to achieve that aim,” S&P said in its report.

“Third-party intervention is often more draconian than the actions taken to date and has a greater likelihood of being detrimental to bondholders,” S&P analyst Lindsay Wilhelm said in the report.

Christie, 52, has struggled with a five-year plan to turn around Atlantic City. Casino revenue fell to $2.5 billion last year from a high of $5.2 billion in 2006, state figures show, as Pennsylvania, Delaware, Maryland and New York expanded gambling.

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