The day – Moody’s judges the refinancing efforts of the casino-owning tribes

Moody’s Investors Service weighed on the gaming tribes of Southeast Connecticut late last week, upgrading the Mohegans ‘financial rating to “stable” and attaching a “limited default” designation to the Mashantucket Pequots’ debt after that the tribe obtained a loan extension.

The Tribes, respective owners of Mohegan Sun and Foxwoods Resort Casino, have faced severe financial pressures in recent months due to the impact of the COVID-19 pandemic on their businesses.

Moody’s upgraded the Mohegan Tribal Gaming Authority’s family bond rating to “Caa1” from “Caa2” and its probability of default rating to “Caa1-PD” from “Caa2-PD”. The agency confirmed its “B1” rating on the Mohegan Senior Revolver Loan and its “Caa1” rating on the Mohegan Senior Secured Notes.

Moody’s investment ratings range from a minimum of “C” to a maximum of “Aaa”, which are considered to be of the highest quality, subject to the lowest level of credit risk. Bonds rated in the “C” range are considered speculative and very risky.

In a rating action Friday, Moody’s cited the Mohegans refinancing on January 26 of a $ 262.9 million loan with a new maturity in April 2023.

“This, along with Moody’s expectations that MTGA will generate approximately $ 25 million in positive free cash flow after interest, cash distributions and capital expenditures in fiscal 2021, will improve the company’s ability to face the challenges of the coronavirus and will reduce its leverage over time. Moody said.

“The elimination of significant short-term loan amortization requirements and term debt maturity allowed MTGA to bypass a potential default later this year,” said Keith Foley, vice president senior of Moody’s.

In an announcement Friday regarding the Mashantuckets’ debt, Moody’s said the “limited default” designation resulted from the tribe’s agreement with a bank lender to extend the maturity date of a term loan from December 31, 2020. until February 16, 2021.

While Moody’s said it viewed the extension of the deadline as a missed payment, the agency noted that the extension did not constitute a default under the Mashantuckets’ debt agreements. About $ 255 million of the original loan principal of $ 275 million was outstanding as of September 30, 2020, according to Moody’s.

“Without the extension, Moody’s estimates that Mashantucket would not have been able to repay the B Term Loan in full on December 31 as current cash flows, although positive, as well as free cash balances are not are not sufficient to meet all of the debt of the Mashantuckets. service obligations, “Moody’s said.

The Mashantuckets have a “Ca” corporate family rating and a “negative” rating outlook. The tribe, which defaulted on $ 2.3 billion in debt in 2009, has been operating under a forbearance deal with lenders since 2014 after failing to meet the terms of a debt restructuring from 2013.

The forbearance agreement has been extended several times.

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