Bally’s credit rating, Moody’s downgrades outlook
Moody's Investors Service downgraded Bally's (NYSE: BALY ) credit rating further to junk status on Monday, lowering the outlook on the rating to negative from stable.
The research firm currently rates regional casino operators a "B2" out of a possible "B1" rating. The new tiers are five tiers of non-investment grade and come as the Rhode Island-based gaming company seeks to raise capital to complete its Chicago casino hotel, its most expensive project to date.
The company plans to build a new casino facility in downtown Chicago. "Chicago is an unrestricted subsidiary and is expected to be financed on a project financing basis. It is expected to return to the restricted group upon entry into service in the fourth quarter of 2026," the ratings agency said. "Moody's expects it will help improve consolidated leverage over the next two years."
Earlier this month, S&P Global Ratings downgraded Bally's credit rating further to junk status from "B" to "B-". S&P expects Bally's to raise the financing needed to complete the Chicago project, but adds that the gaming company faces risks.
Downgrade will become a takeover target for Bally
Moody's downgraded Bally's credit rating, two weeks after the casino operator's largest shareholder, Standard General, offered $15 a share to take the company private.
The offer was less than half what the money manager had proposed to Bally's in 2022, and it sparked speculation about the fate of the Chicago project, but Standard General has since eased those concerns, saying the Windy City would The casino will complete the gaming company. A committee of independent directors is considering the acquisition proposal.
Outside of Chicago, Bally's could face high expansion costs in key markets such as Las Vegas and New York, which could lead to higher debt.
“Additional acquisition or development opportunities, such as the potential to develop gaming facilities on a recently acquired golf course in New York or the redeveloping of the Tropicana casino site in Las Vegas, although uncertain, involve the risk of increased debt Moody’s Adding that long-term growth will require “significant capital investment”.
Exploiting Ballys potential concerns
High leverage and junk credit ratings are problematic for companies seeking financing because when these companies issue corporate bonds, they must compensate creditors for the perceived risk with high interest rates. Bally's' negative outlook is partly due to its weak debt profile.
Moody's noted: "The negative outlook reflects the company's high debt levels and increased risks associated with its planned development activities, which may result in longer debt persistence."
Bally's credit rating could be downgraded further if liquidity deteriorates or the operator's earnings before interest, tax, depreciation, and amortization (EBITDA) ratio remains above 7.5 times for an extended period, the ratings agency said.
Read also:
- Michigan online casinos hit record high in November due to strike
- Tony Shea Estate sells Las Vegas' long-shuttered Casino West
- AFC North Preview: Cincinnati Bengals aim for third straight title
- Vegas Music Roundup: Tiesto in, Xtina out, Sphere back from the dead?
Source: www.casino.org
