A bankrupt Arizona youth-sports complex was sold in a transaction that will virtually wipe out bondholders, capping a collapse that marks one of the biggest municipal-debt defaults since the pandemic, Bloomberg News reported. The project was financed with $280 million of bonds issued through the Arizona Industrial Development Authority in 2020 and 2021, when still rock-bottom interest rates were fueling demand for high-yield debt. But the sprawling sports-field venue outside of Phoenix, known as Legacy Park, faltered as the pandemic upended the sports industry and interest in the facility proved lackluster. It subsequently defaulted on the debt and filed for bankruptcy in May. The saga highlighted the risk carried by bonds that are issued by government agencies on behalf of speculative businesses. Because the agencies aren’t on the hook if the ventures fail, they’re far more default-prone than typical municipal bonds backed by state and local tax revenues. As part of the bankruptcy, an affiliate of Rocky Mountain Resources on Thursday closed on the approximately $26 million purchase of the facility, a set of fields and courts for soccer, football, baseball, basketball and other sports. Most of the proceeds are going to building contractors for unpaid work. Bondholders will get $2.4 million in cash and an 11% equity stake in the new ownership entity.
