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Delta’s actions cause a setback in the fragile recovery of the convention industry.
As the number of coronavirus cases skyrocketed again, some large gatherings were closed, damaging businesses that were already struggling to recover from the era of social distancing and telecommuting. I am. The New York International Auto Show has been canceled for the second year in a row due to pandemic concerns. In Florida, the North American Food Equipment Manufacturers Association and the World Surgical Council, the epicenter of the outbreak in the United States, have canceled their event with the latter organizer due to a “dramatic increase” in state incidents. .
“It’s very difficult to attract a group of people and make everyone feel comfortable in the meeting,” Safina Ali, credit analyst at S&P Global Ratings, said in an interview. “To some extent, they might not even be able to return to pre-Covid levels,” she said, referring to the convention center.
Since the pandemic hit the United States in early 2020, bond convention center activity has run out. The Center for Exhibition and Industry Research reported that the industry shrank to $ 24 billion, down $ 77 billion from 2019.
Brad Maine, President and CEO of the International Venue Managers Association, said:
Eric Kazatsky, senior U.S. municipal bond strategist at Bloomberg Intelligence, said convention center debt hasn’t been so painful so far. Many of them had enough liquidity to enter a pandemic and decent credit quality.
“They had money to spend,” Kazatsuki said. “Things are not completely zero. They just refused. The tournament is still ongoing.
Additionally, he said the municipal bond market is looking for supply as investor demand continues and is hungry for new projects.
Municipal bonds for convention centers have sold around $ 1.5 billion so far this year, up from $ 2.4 billion during the same period in 2020, according to data compiled by Bloomberg. There are a few upcoming municipal bond deals where you might be able to see how investors view risk.
The city of Abilene, Texas is seeking funding for the construction of a full-service 200-room luxury hotel and conference center 150 miles (241 km) west of Dallas Fort Worth by the intermediary of the Abilene Convention Center Hotel Development Corporation. range. S&P is considering a $ 19.5 million BBB- quick lien bond, a cut above the junk. In addition, the company is also selling $ 24.7 million of Second Doreen bonds for this project.
In Texas, the Baytown Development District, a suburb of Houston, will sell about $ 61 million in bonds to fund the development of the approximately 208-room Baytown Convention Center hotel.
However, such transactions may believe in the risks of industry downturn. Earlier this week, S&P said it expects Overland Park Development Corporation in Overland Park, Kansas to use a $ 530,000 debt repayment reserve to cover part of its interest payments. September 1. Declared.
In a report on external debt on Tuesday, S&P said: “If profits do not improve significantly for the remainder of 2021, credit quality could decline, especially given the additional uncertainty imposed. by the Delta variant. There are. “
Cooper Howard, director of fixed income strategy at the Schwab Financial Research Center, said the impact of the pandemic on the convention center was “to examine the liquidity and health of the areas in which they are located.” . It does not appear to present a significant risk for this sector. In the long run, we’re careful, ”Howard said.
People will walk to the New York International Auto Show at the Jacob K Javits Convention Center in New York City on April 17, 2019.
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