Las Vegas escapes S&P ‘credit watch’ report

Adrienne Packer

Thursday, Oct. 4, 2001 | 9:54 a.m.

Clark County's reputation for being resilient has kept it off a "credit watch" list issued Wednesday by Standard & Poor's in response to sagging tourism rates nationwide.

According to the report, the financial rating firm is confident that the county, state and city of Las Vegas will bounce back, despite the valley's limited economic base.

"Although these entities are heavily dependent on tourism and gaming revenues, anecdotal evidence from both the entities and the gaming operators suggest that the sharp declines experienced immediately after Sept. 11 are gradually being reversed," the report says.

Hawaii's bond rating, AA minus, is of greatest concern to Standard & Poor's, mostly because of people's apparent fear of flying. Not only is the state dependent on tourism, but the primary mode of transportation to reach Hawaii is by air.

Washington and Anaheim, Calif., were also put on credit watch.

Similar to Las Vegas, Orlando, Fla., escaped the list despite being a tourist destination. Standard & Poor's credited both Southern Nevada entities and Orlando for having strong reserve funds.

Guy Hobbs, a financial consultant and lobbyist who represents Southern Nevada governments, said he expects Clark County to maintain its AA grade and Las Vegas to keep its AA minus rating despite the recent economic troubles.

"Consumer traffic will continue to creep back if nothing else happens; their assessment is accurate," Hobbs said. "It shows they believe we have enough reserves and a contingency plan to weather an economic downturn.

"I hope their belief will continue. I hope this was an isolated incident."

Hobbs said governments keep in close contact with credit rating firms, and that Standard & Poor's, as well as Moody's, were kept abreast of tourism numbers after the terrorist attacks.

The strongest indication of how well the area can survive a turbulent economy will come with October's room tax, gaming tax and sales tax figures.

Standard & Poor's report pointed out that Nevada has a "rainy day" fund of $147 million; Las Vegas closed 2000 with an unreserved general fund balance of $46 million, and Clark County's undesignated general fund balance is $117 million.

Despite the healthy reserve funds, Standard & Poor's will continue to closely monitor Las Vegas' rebound.

"This partial recovery is tenuous ... and future CreditWatch actions are possible," the report says.