The investment rating service Moody’s reported Friday it has a dim view of the Golden Nugget, widely considered the most prominent property in downtown Las Vegas.
The agency downgraded about $545 million in debt attached to the Golden Nugget and a sister property in Laughlin.
The downgrade suggests ratings analysts are skeptical that Golden Nugget parent company Landry’s Restaurants Inc. decision to build a new tower downtown is wise.
“While Golden Nugget continues to spend and incur debt to expand its Las Vegas property, we do not believe the ultimate earnings generation from this project will be as significant as first believed given the difficult economic environment,” said Bill Fahy VP, senior analyst.
The report continues: “The negative outlook reflects Moody’s expectation of further deterioration in operating performance as the persistently weak economic environment continues to pressure customer visits. The outlook also anticipates that higher debt levels required to support committed expansion projects and weaker operating performance will result in further deterioration in liquidity and debt protection measures.”
The analysts changed the debt and default-likelihood ratings from “highly speculative” to “substantial risk” in two categories.