Wall Street firm maintains opinion of KFC Yum! Center debt - WDRB 41 Louisville News

Wall Street firm maintains opinion of KFC Yum! Center debt

Posted: Updated:

LOUISVILLE, Ky. (WDRB) – A Wall Street bond rating agency has upheld its opinion of the debt borrowed to build the KFC Yum! Center, one of two reviews expected in the coming months.

Moody’s Investors Service analysts said in a report issued Dec. 9 that they are maintaining a “Ba3” rating on $346 million in bonds and keeping the debt’s outlook “stable.” The bonds aren’t viewed as investment-grade securities.   

The rating is an indicator of the arena’s debt payment plan, which relies on public and private funds, including sales and property tax rebates and an annual $9.8 million pledge from Louisville Metro. It has drawn criticism for a lease with the University of Louisville that some consider overly generous.

While Moody’s recognized several “positive results,” such as the recent 10-year contract extension to arena manager AEG and an increase in some revenues used to pay off debt, it also noted “the ascending debt service payment profile and limitations related to its operating agreements.”

The arena has enough revenue to pay off debt -- 1.1 times the amount needed, according to Moody’s. But that ratio is considered “narrow.”   

The Louisville Arena Authority, a 15-member board appointed by Kentucky’s governor and Louisville’s mayor, oversees the financing of the 22,000-seat building at Second and Main streets whose main tenants are U of L’s basketball teams.

Arena officials have said they have enough cash on hand to meet payments due Dec. 1 and into next year. At the same time, the arena authority is bracing for debt payments that will increase over the next decade and beyond.

The arena authority owed $22.3 million in principal and interest for the year ending Dec. 1. Those payments largely rise in the coming years before peaking at $37 million in 2029.

Moody’s also noted in its report that the arena’s renovation and reserve fund has been depleted since the building opened in 2010.

Standard & Poor’s is expected to update its ratings on the arena debt.

PREVIOUS:

Arena manager gets five-year extension

KFC Yum! Center tax district falls below expectations

Louisville Water Company glitch gives KFC Yum! Center free water for four years

KFC Yum! Center bond debt downgraded

Copyright 2015 WDRB Media. All rights reserved.

  • Sign Up for WDRB's Sports Newsletter

    * denotes required fields

    Thank you for signing up! You will receive a confirmation email shortly.
Powered by Frankly
All content © Copyright 2000 - 2017 WDRB. All Rights Reserved. For more information on this site, please read our Privacy Policy, and Terms of Service, and Ad Choices.