Moody’s upgrades MGM Resorts
The latest move by MGM Resorts International to address the company's liquidity concerns drew a positive recommendation from Moody's Investors Service Tuesday.
The ratings agency upped its opinion of the Las Vegas-based casino operator after the company said it hoped to raise about $500 million in unsecured notes due in 2016.
Moody's changed its outlook on MGM Resorts to positive from stable.
"The outlook revision to positive reflects the favorable impact on MGM's liquidity," Moody's gaming analyst Keith Foley said in a report.
The company plans to use the funds, along with $511 million raised from a stock offering last week, to retire about $1.2 billion of debt that matures in October 2011. MGM Resorts has about $13 billion in long term debt.
"Moody's anticipates that MGM will now have sufficient revolver capacity to meet its 2011 and 2012 required debt amortizations and guaranty funding obligations for CityCenter," Foley said.
The analyst said MGM Resorts continues to need further deleveraging transactions.
Moody's might also up its opinion of the company if Strip casino companies show continued recovery. In August, Strip gaming revenues grew 21 percent and MGM Resorts controls 10 Strip casinos, including Aria at CityCenter.
Foley said MGM Resorts and Dubai World, which own CityCenter in a 50-50 joint venture, need to amend the terms of a $1.8 billion loan that was used to complete the project, which opened last December.
"The rating outlook could revert back to stable if operating conditions in Las Vegas deteriorate or MGM is unable to further improve its liquidity profile," Foley said.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.
