Verizon Arena Bonds Downgraded

The Verizon Wireless Arena in Manchester, N.H., has seen the first of what could be a lot of bad news.

Moody’s Investors Service recently downgraded bonds used to build the arena, from Baa3, which already suggested some risk, to “non-investment grade” Ba2.

Moody’s is concerned about the state’s decision to cap the amount it shares with cities and towns regarding rooms-and-meals sales tax money.

Because of the cap, there will be a $66,000 shortfall on the bonds next July, followed by more shortfalls, according to Moody’s.

City officials initially told the Verizon Wireless Arena that the shortfall could lead to a bond default, which could put the arena into the hands of the bondholders’ trustee, Bank of New York Mellon. The city’s bond counsel has since said there is no such risk, according to the New Hampshire Union-Leader.