Saturday, January 31, 2009

Mohegan Gaming Authority's Credit Rating Downgraded

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A major credit rating agency, Standard & Poors, downgraded the Mohegan Tribal Gaming Authority's credit rating on Friday.

One day after MTGA announced a $3.8 million loss for the three-month period of October through December, Standard & Poor's cited liquidity concerns and the possibility of further revenue and profit declines.

Standard & Poors lowered MTGA's rating from BB to B and placed MTGA on a credit watch with negative implications.

Standard & Poors also noted its concerns over MTGA's ability to remain in compliance with agreements with creditors.

According to S&P's rating scale, the highest rating is AAA, followed by AA, A, BBB, BB, B, CCC, and R is the worst credit rating. MTGA's 'B' rating means that Standard & Poors considers the debt investment as 'speculative' (also known as a 'junk bond') as opposed to an 'investment grade' instrument.

The Mohegan Tribal Gaming Authority owns and operates the Mohegan Sun Casino and the Pocono Downs racetrack-slot parlor in Pennsylvania.

MTGA announced on Thursday that Pocono Downs lost $1 million, before taking account interest expenses related to that property, for the three-month period of October through December. If interest expenses were included on the approximately $635 million investment in the Pocono Downs property, then the loss would be nearly $10 million for the three-month period.