Moody’s Up­grade Buoys Vegas Con­ven­tion Deal

The Bond Buyer - - Front Page - By Kee­ley WeB­ster

The Las Vegas Con­ven­tion and Visi­tors Au­thor­ity can tout a higher rat­ing when it sells $500 mil­lion of rev­enue bonds next week.

Moody’s In­vestors Ser­vice on Aug. 28 up­graded the au­thor­ity’s rev­enue bonds to Aa3 from A1 while as­sign­ing the Aa3 rat­ing to the $500 mil­lion ne­go­ti­ated deal ex­pected Sept. 13.

“The up­grade to Aa3 pri­mar­ily re­flects LVCVA’s en­trenched po­si­tion as the na­tion’s mar­ket leader for large-scale con­ven­tions and the area’s sub­stan­tial tourism ameni­ties that in­clude the renowned Las Vegas Strip,” ac­cord­ing to Moody’s an­a­lyst Pa­trick Lib­er­a­tore.

Moody’s, separately, main­tains its Aa1 rat­ing on $801 mil­lion of

the au­thor­ity’s dou­ble-bar­reled gen­eral obli­ga­tion lim­ited tax rev­enue bonds is­sued through Clark County, of which Las Vegas is the seat.

Bond pro­ceeds from this month’s deal will help fund the au­thor­ity’s $860 mil­lion Phase Two ex­pan­sion project that will add 1.4 mil­lion square feet to Las Vegas Con­ven­tion Cen­ter — the coun­try’s busiest. The ex­pan­sion is slated for 2021. A Phase Three is also planned.

RBC Cap­i­tal Mar­kets is lead man­ager. JNA Con­sult­ing Group, LLC and Mon­tague DeRose are co-fi­nan­cial ad­vi­sors. Stradling is bond coun­sel.

“South­ern Ne­vada’s econ­omy is driven by tourism and this ex­pan­sion will pro­pel our con­ven­tion cen­ter for­ward to en­able us to main­tain our sta­tus as the num­ber one trade show des­ti­na­tion in North Amer­ica,” Rossi Ralenkot­ter, LVCVA chief ex­ec­u­tive of­fi­cer, said in April when ar­chi­tec­tural draw­ings were re­leased.

The Au­thor­ity’s rev­enue bonds are all se­cured by a first lien pledge of net rev­enues from ho­tel room taxes col­lected through­out Clark County as well as rev­enues from its con­ven­tion fa­cil­i­ties after the pay­ment of op­er­at­ing ex­penses.

The new deal is also se­cured by the au­thor­ity’s ex­pan­sion pledged rev­enues, an in­cre­men­tal ho­tel tax legally ded­i­cated to ex­pand­ing the Las Vegas Con­ven­tion Cen­ter.

“In­creas­ing ho­tel room rates are bol­ster­ing pledged tax re­ceipts at a mod­est pace and to new all-time highs, and av­er­age daily ho­tel oc­cu­pancy has been un­com­monly strong at 89%,” Lib­er­a­tore said. “Sound max­i­mum an­nual debt ser­vice cov­er­age of 3.0 times fis­cal 2017 pledged rev­enues pro­vides head­room to en­dure eco­nomic volatil­ity. Re­cent eco­nomic growth in the US and glob­ally di­rectly ben­e­fits the au­thor­ity’s rev­enues.”

Visit vol­ume de­clined mod­estly in 2017, but re­mained in the 42 mil­lion range, after reach­ing all-time highs for each of the past few years, ac­cord­ing to Moody’s.

The au­thor­ity is an in­de­pen­dent gov­ern­men­tal en­tity with its own gov­ern­ing board and ad­min­is­tra­tive staff.

S&P Global Rat­ings af­firmed its A-plus un­der­ly­ing rat­ing on the au­thor­ity’s out­stand­ing rev­enue bonds ahead of the new deal. Both rat­ing agen­cies as­sign sta­ble out­looks.

Pro­ceeds of the 2018B bonds will fi­nance con­struc­tion of the con­ven­tion cen­ter project, fund cap­i­tal­ized in­ter­est through 2020, and pay the costs of is­suance. ◽

Las Vegas CVA

A ren­der­ing of the Las Vegas Con­ven­tion Cen­ter ex­pan­sion project. A $500 mil­lion rev­enue bond deal will help fund the im­prove­ments.

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