Tuesday, November 17, 2009

Mashantucket's Credit Rating Downgraded

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This installment of The Tribes In The Media is a Bloomberg News article on the Mashantucket Pequot Tribe's likely default on interest payments:

Foxwoods Casino Owner Will Likely Default on Payments (Update2)
By James Callan
Bloomberg News
November 16, 2009

The Mashantucket Pequot Tribal Nation, owner of Foxwoods Resort Casino, said it will probably default on interest payments for its $500 million of 8.5 percent notes due in 2015.

The tribe entered a 30-day grace period for payments on the notes and doesn’t expect the remaining amounts to be paid during that period, according to an e-mailed statement today. The trustee for the notes has received and distributed about $14.2 million of the $21.3 million semi-annual interest payment due today, the southeastern Connecticut-based tribe said in the statement.

Last month, creditors for the tribe agreed not to pursue default rights if debt payments aren’t made or loan conditions are breached. That forbearance agreement with senior lenders runs until Jan. 20, giving the tribe time to restructure debt.

Standard & Poor’s cut its rating on the notes four steps to D today, signaling the debt is in default.

Moody’s Investors Service stopped covering the tribe because the rating company “lacks adequate information to maintain a rating,” according to a statement released today.

The 8.5 percent notes due in 2015 rose 0.125 cent to 30 cents on the dollar today, according to data compiled by Bloomberg.

Foxwoods, among the largest casinos in the U.S. by gambling space, is on tribal land in the town of Ledyard. It has lost business in the recession and to competition from new casinos and racetracks with slot machine-style video-lottery in nearby states.