KFC Yum! Bonds Downgraded

Moody’s said the Louisville, Ky., arena’s agreements with the University of Louisville, along with increases in interest and principal payments and the reconfiguration of a tax district, may hinder the venue’s ability to pay off nearly $350 million in bonds, according to the local Courier-Journal.

The arena’s bonds are now valued at junk status.

Metro Council President Jim King told the paper it was unfortunate Moody’s didn’t acknowledge “all the positive changes that have been made in the management and operation of the arena and the success that it’s shown in the last year.

All payments have been made timely and we already have adequate cash flow to make the payments in the foreseeable future.”

Moody’s apparently saw the institution of a special tax increment financing district outside the venue as a good thing, and suggested the district could produce as much as $6 million in the next two years.

But the Louisville Arena Authority that oversees the building has instead opted to shrink the district in order to boost revenues from new bars and restaurants opening nearby – a move that could prove risky.

A spokesman for Louisville Mayor Greg Fischer told the Courier-Journal the mayor believes “over time the TIF revenue is going to improve and the arena will be on a much better footing.”

City officials had reportedly estimated the TIF district would have returned $20.1 million to the building by 2012, but those estimates have not been met thus far.