National Aquarium in Baltimore, whose bond rating was downgraded by a major Wall Street firm this week, said Wednesday that the nonprofit has been taking steps to improve its financial condition during tough economic times.
Moody's Investors Service cut the aquarium's rating from "A3" to "Baa1," which is still an investment-grade category but a move that makes it more expensive to borrow money.
Moody's cited concerns about the aquarium's diminishing financial resources due to recent investment losses, using funds from the group's foundation arm to finance capital projects and pressure on attendance as well as exposure to debt with a variable rate.
It is the second time that the aquarium's rating was cut this year. In February, Fitch Ratings knocked the aquarium from a "BBB+" rating to "BBB," the lowest investment-grade category it offers.
Aquarium officials said Moody's downgrade was not a surprise, given the instability of the financial markets during the past year.
"You can't argue with the fact that one of the big factors affecting us is the downturn of the stock market. Because we have endowments, the foundation is invested in stocks primarily, and that has declined," David Pittenger, the aquarium's executive director, said in an interview. "We have no intentions to utilize any more funds from our foundation for capital projects.
"Since we opened in 1981, every year, we've operated in the black," he added.
The aquarium's foundation has $14.3 million in its account.
Over the past 18 months, the aquarium said, it has been making changes to address its financial challenges, including cutting expenses, promoting its exhibits and hiring a financial advisory firm to deal with its variable-rate bond.
The aquarium has $30.8 million in debt, including $12.6 million in variable-rate demand bonds. Interest rates on this type of bond have spiked since the financial sector meltdown last fall.
Pittenger said the aquarium has been focused on generating more revenue. The aquarium opened a new jellyfish exhibit in May and partnered with other Inner Harbor organizations to promote summer tourism at Baltimore's waterfront.
Moody's noted that paid visitor attendance had fallen 6.3 percent in 2007 and 3.5 percent in 2008. The aquarium averages about 1.5 million a year.
Attendance and general admissions so far this year are ahead of last year's, and revenue is nearly $1 million ahead of budget projections at the end of May, the aquarium said.
"Whether it's marketing in terms of the waterfront and we do some of our own promotion, ... people want to stay closer to home and they like family-oriented kinds of experience," Pittenger said.
