Moody’s Investors Service has upgraded the Mohegan Sun casino operator’s “corporate family rating” to B2 following the closing of $1.4 billion in refinancing.
Moody’s also warns that The Mohegan Tribal Gaming Authority’s ability to dodge market saturation challenges as other casinos debut could affect an outlook now reported as stable.
Moody’s also upgraded the MTGA’s probability of default rating to B2-PD, while affirming a B1 rating on the $1.4 million refinancing and B3 rating on new senior $500 million unsecured notes.
The changes in MTGA’s debt maturity profile and reduction in overall debt costs improve its “overall financial flexibility and ability to deal with the substantial increase in direct competition coming from the planned 2018 opening of MGM Resorts International’s $800 million MGM Springfield casino in Springfield, Mass.,” said Keith Foley, a senior vice president at Moody’s.
The Mohegan and Mashantucket tribes are in the midst of selecting developers for a third casino that could compete with MGM Springfield.
Gaming revenue performance also “appears to have stabilized in Connecticut,” Foley said, as well as across the country, so MTGA is experiencing the benefits of “lower and more efficient cost structures.”
However, he noted that a “ratings upside is not likely until MTGA demonstrates the ability to compete with MGM Springfield.”
