Tuesday, February 3, 2009

Second Major Credit Rating Downgrades Mohegan Gaming Authority's Credit Rating

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A second major credit rating agency, Moody's Investors Service, downgraded the Mohegan Tribal Gaming Authority's credit rating after the issuance of the gaming authority's first quarter earnings report.

Moody's lowered MTGA's corporate family of bond debt from 'B1' to 'B2.' MTGA's senior subordinated debt rating was reduced from 'B3' to 'Caa1.' All of these categories are considered speculative investments, commonly known as junk bonds.

Last Friday, Standard & Poor's also downgraded MTGA's credit rating.

MTGA reported last Thursday that it lost $3.8 million for the three-month period of October through December. In downgrading MTGA's credit rating, Moody's cited the possibility of further earnings erosion in the coming months.

A lower credit rating increases a company's cost of borrowing money than it would otherwise pay with a stronger credit rating.