Reserves protect municipal bonds buffeted by Disney theme park woes – Bond Buyer




Solid reserves will protect municipal bonds buffeted by troubles at the Walt Disney Co. theme parks that were underscored by the announcement that it will lay off 28,000 employees at its resorts in Anaheim, California, and Orange County, Florida, according to Moody’s Investors Service.

California’s Disneyland Park has been closed since March 14 amid the initial wave of closures after COVID-19 hit the U.S. The Walt Disney World parks in Florida also closed in March, but reopened in June with attendance restrictions to reduce crowding.

Bonds secured “by tourism-related revenues will maintain their strong credit quality because of robust reserve funds,” even though the layoffs are “credit negative for both municipalities, because of the financial effect from the job losses and the signal that Disney expects its U.S. parks’ business to continue suffering for some time,” Moody’s analysts wrote in a comment piece Oct. 2.

California Gov. Gavin Newsom, a Democrat, has outlined a more stringent process for re-opening than Florida Gov. Ron DeSantis, a Republican. California aborted reopening efforts in some counties in July after infections in the state spiked. The state has pursued a more gradual reopening strategy in recent weeks without a new spike in COVID-19 cases.

DeSantis has lifted most state COVID-19 restrictions. Florida’s new case numbers have declined since the summer.

Anaheim’s two Disney theme parks have been closed since March “and will remain closed until current state restrictions on amusement parks are lifted,” Moody’s analysts
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