Wednesday, November 19, 2008

Wall Street Downgrades Mohegan Gaming Credit Rating

Feather News
Updated with Bloomberg News comment

The Associated Press reported this afternoon that the Mohegan Tribal Gaming Authority's credit rating just got worse after a Wall Street credit rating company, Moody's Investors Service, downgraded its credit rating to a 'B1' rating, defined as lacking "characteristics of a desireable investment."

A lower credit rating means that MTGA will pay higher interest rates than it otherwise would pay on future debt borrowings.

According to AP, "Moody's said negative gaming trends in Connecticut and "significant" dividends paid to the Mohegan Tribe will hamper the company from lowering the debt-to-earnings ratio in the near-term."

Moody's also reduced the credit rating for Mashantucket Pequot Tribal Nation and its special revenue obligation bonds. Moody's noted that "weakness in gaming trends in Connecticut and the Northeast will hamper the company from lowering its debt-to-earnings ratio over the next several years to a level appropriate to its former investment grade rating."

Bloomberg News' noted of the Mohegan downgrade, "Mohegan Tribal Gaming Authority, the owner and operator of the Mohegan Sun casino in Connecticut, received its second downgrade in six months from Moody's Investors Service. The new corporate peg is down two steps to B1, while the senior subordinated notes are three spaces lower at B3. The new Moody's rating is one grade below the downgrade issued last week by Standard & Poor's.