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Rating Action:

Moody's upgrades Yankees Stadium LLC to Baa1 from Baa2; Assigns Baa1 to $779 million PILOT Revenue Ref. Bonds, Series 2016

14 Sep 2016

New York, September 14, 2016 -- Moody's Investors Service, ("Moody's") has upgraded Yankee Stadium LLC's rating to Baa1 from Baa2, affecting about $1.2 billion of rated debt outstanding. Moody's has also assigned a Baa1 to Yankee Stadium LLC's $779 million PILOT Revenue Refunding Bonds, Series 2016. The outlook is stable. The New York City Industrial Development Agency, NY serves as the issuer of the bonds.

RATINGS RATIONALE

The upgrade to Baa1 from Baa2 reflects the improved forecasted financial metrics and overall project resiliency due to the significant debt service savings derived from the planned bond refunding that appreciably reduces annual debt service costs on a sustained basis. Also, there is an increased liquidity cushion following the refunding given the annual PILOT payments that Yankee Stadium LLC makes every February 1st to the NYC IDA remain the same, but the margin between the PILOTs and the actual amount of debt service paid will increase after the planned refunding. This increases the amount of cash held by the NYC IDA that is subsequently released to Yankee Stadium LLC in September of each year to fund stadium operating and maintenance expenses.

The Baa1 rating reflects the strength of the Yankees franchise and the teams' location in the strongest and most affluent media market in the US. A key credit strength is the teams' non-relocation agreement that ties the team to the stadium. The rating acknowledges the inherent cyclicality of the sports industry and incorporates the variable nature of the essentially single-sourced revenue stream assigned to the bonds. This potential variability warrants higher coverage ratios compared to projects that have a higher level of contracted and more predictable revenues assigned to pay debt service. The potential revenue variability is balanced against a long history of demand and proven resiliency through variable team performance and economic cycles that provides a good degree of cash flow certainty. The Yankees have a long history of loyal attendance that provides a base level of demand to support stadium operations, debt service, and distribution of excess revenues.

The capital structure provides significant headroom to absorb the expected revenue variability that is likely to occur multiple times over the life of the bonds. Debt service coverage ratios (DSCRs) have remained strong despite declines in recent years owing to lower revenues and rising debt service costs that plateau in 2017. With the planned refunding and anticipated annual debt service savings, the level of headroom and degree of resiliency will be enhanced on a sustained basis, resulting in more robust DSCRs under several downside scenarios examined. The rating further incorporates the relatively simple nature of the stadium operations and capital reinvestment profile, as well as the simplified capital structure with only one swaption with a low negative mark-to-market of $1.8 million as of mid-September 2016. The rating also recognizes the strong project financing protections including high reserves, no ability to accelerate the PILOT bonds, and other aspects of the stadium's project finance structural features that exist in the financing documents, which we believe provide incremental protection for bondholders in several downside scenarios.

Rating Outlook

The stable outlook reflects our expectation that assigned regular season ticket sale and luxury seat license revenues will provide above average coverage of annual debt service costs on a sustained basis enabling the issuer to distribute excess cash flow to support team operations.

Factors that Could Lead to an Upgrade

• Debt service coverage ratios consistently exceed 4.5 times on a gross basis

• A material reduction in total leverage

Factors that Could Lead to a Downgrade

• Debt service coverage ratios consistently below 3.0 time on a gross basis

• Competitive pressures that impact New York Yankees Partnership's (NYYP) ability to field a quality team, which results in a material decline in future attendance and ticket sales

• Prolonged player strike that results in materially weaker revenues and the need to draw on reserves

The principal methodology used in these ratings was Generic Project Finance Methodology published in December 2010. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology.

Issuer Profile

Yankee Stadium is the home facility for the New York Yankees and is located in the Bronx, New York. The land upon which the facility is situated is owned by the City of New York and is leased to the New York City Industrial Development Agency (NYC IDA) for a 99-year term and the NYC IDA owns the facility itself. Yankee Stadium LLC (StadCo) leases the facility and subleases the land from NYC IDA. Debt service-like payments are made from StadCo to the NYC IDA in connection with both the lease and the sublease. StadCo makes a payment in lieu of taxes (PILOT) and a rental payment to the NYC IDA, the issuer of the bonds. The NYC IDA uses the PILOT and the rental payment to pay debt service on the PILOT bonds and the taxable rental bonds. Assigned revenues from StadCo, which are generated by luxury suite license fees and ticket sales from approximately 81 regular season Yankees home games, are the source of PILOT and rental payments. . Ultimately owned by Yankee Global Enterprise (YGE), StadCo does not partake in other business related activities and its obligations are without recourse to YGE or any related affiliate.

Upgrades:

..Issuer: New York City Industrial Development Agcy, NY

....Senior Secured Revenue Bonds, Upgraded to Baa1 from Baa2

....Senior Unsecured Revenue Bonds, Upgraded to Baa1 from Baa2

....Underlying Senior Unsecured Revenue Bonds, Upgraded to Baa1 from Baa2

Assignments:

..Issuer: New York City Industrial Development Agcy, NY

....Senior Unsecured Revenue Bonds, Assigned Baa1

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

John Medina
Vice President - Senior Analyst
Project Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

A.J. Sabatelle
Associate Managing Director
Project Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
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