High-yield muni deal for Upstate New York casino is delayed

A high-yield municipal bond transaction to fund the purchase of businesses related to a casino in upstate New York has been delayed, people familiar with the matter said. 

The unrated $561 million deal, managed by KeyBanc Capital Markets, was expected to price on Wednesday, according to investor roadshow documents. 

The transaction has been postponed for the hiring of legal counsel to advise investors in the transaction, said the people, who were not authorized to speak publicly because the matter is private. The move is known in the market as the hiring of purchaser’s counsel. 

Proceeds of the sale are expected to fund the purchase of the non-gambling businesses at Genting Group’s Resorts World Catskills in Sullivan County, New York. The bonds are to be issued by the Sullivan County Resort Facilities Local Development Corp., a not-for-profit organization created under New York’s economic development law. 

The deal is now listed as day-to-day status, according to data compiled by Bloomberg. Representatives for KeyBanc and the development corporation declined to comment.

With the funds from the sale, the hospitality company plans to purchase the land the resort sits on — which it currently rents from a real estate investment trust — pay off a balloon payment on outstanding debt due in 2026 and enter into a long-term management agreement, according to a spokesperson for the resort. 

A spokesperson for the company declined to comment on the delay. 

The resort in Thompson, New York, 90 miles from Manhattan, features two hotels, a golf course, spa and fitness center, multiple restaurants, as well as conference and event space. 

When it opened in 2018, Resorts World Catskills was betting on a resurgence of tourism to the region, which was once a getaway of choice for New Yorkers seeking a reprise from city life. It didn’t generate enough cash to cover its expenses, according to a 2019 regulatory filing by Empire Resorts Inc., the publicly traded company that owned it.

Future revenue is also in limbo with New York is considering opening up three casinos near New York City that threaten to pull business from upstate. Roughly 30% of the player base for the casino business comes from the city’s five boroughs, according to bond documents. 

An arm of Genting is angling for one of the New York City licenses to build a casino near John F. Kennedy International Airport in Queens. Should it be successful, there would be “a significant potential cross-selling opportunity,” the bond documents state.
  
The bonds are unrated and backed by revenues from the non-gambling parts of the resort like hotel rates and golf-course fees.

The bond documents outlined roughly 20 pages of warnings for prospective buyers to consider like the possibility of bankruptcy and liquidity issues for the debt in the secondary market. 

The issue is to be structured with a single maturity in 2040, according to people familiar with the matter. The bonds were offered with a 5.75% coupon and a 6% yield, which is roughly 200 basis points more than top-rated debt, said people familiar with the matter, who asked not to be identified because they weren’t authorized to speak publicly. 

High-yield municipal bonds are also having a down year, dropping nearly 1.6% since the start of 2025, according to data compiled by Bloomberg. That compares to a roughly 5.9% gain for corporate junk bonds, the data shows.