As we ponder the Manny crisis, let's not lose sight of the fact that there's another crisis still out there:
Municipal bonds sold in 2006 to finance the New York Mets' Citi Field may be cut to speculative grade, or junk, status by Moody's Investors Service after the surety bond provider, Ambac Assurance Corp., was downgraded.
Moody's placed about $613 million of Queens Baseball Stadium tax-exempt and taxable bonds sold through New York City's Industrial Development Agency under review for possible downgrade. The debt, rated Baa3, the lowest investment grade, is backed by payments in lieu of property taxes, or Pilots.
I suppose the Mets don't care. They got their stadium out of it. If these bonds don't sell, however, it will end up having cost the taxpayers of New York a lot more than they bargained for. Or, more to the point, didn't bargain for, as the city's new stadium projects were basically forced down their throats.
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So what else is new? There is nothing worse than a despicable politician. And our country is filled with them
I don't think this really matters for the Mets; Ambac is the note or certificate insurer, so they "wrap" the bonds with a policy that protects the investors from principal losses arising from a shortfall of the Pilot cashflows. The impact of this is on investors that hold the bonds, as the Mets have already sold them and received their cash up front, while the investors have lost some of the value of their cashflow protection. Then again, if the underlying bonds continue to pay anyway, none of this even matters.