Moody's cuts Churchill Downs

Moody's Investors Service said it downgraded Churchill Downs Inc.'s corporate family rating to Ba3 from Ba2. The agency also lowered the senior unsecured bond rating to B1 from Ba3 and affirmed the senior secured bank facility at Ba1. Moody’s revised the outlook to negative from stable. Moody's also downgraded the speculative grade liquidity rating to SGL-2 from SGL-1.

The downgrade to Ba3 is in response to the disruption in casino and horse racing visitation resulting from efforts to contain the spread of the coronavirus including recommendations from federal, state and local governments to avoid gatherings and avoid non-essential travel. These efforts include mandates to close casinos temporarily.

On March 17, Churchill announced the rescheduling of the Kentucky Derby and Kentucky Oaks. The Kentucky Derby will be rescheduled to Sept. 5 from May 2and the Kentucky Oaks will be rescheduled to Sept. 4 from May 1. The company has temporarily suspended casino and racing operations at most of its locations as a precautionary measure and in cooperation with state and local authorities.

The downgrade also reflects the negative effect on consumer income and wealth stemming from job losses and asset price declines, which will diminish discretionary resources to spend at casinos and other entertainment facilities, including at Churchill's gaming and horse racing venues, once this crisis subsides.

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