S&P rates Caesars notes B

Standard & Poor's said it assigned a B rating and 2 recovery rating to Caesars Entertainment Corp.'s proposed $300 million first-lien senior secured notes due 2020 to be issued jointly by Caesars Operating Escrow LLC and Caesars Escrow Corp.

The 2 recovery rating indicates 70% to 90% expected recovery in a default.

The rating assumes that the company will reduce first-lien debt by about $150 million following this transaction through the repayment of outstanding term loans, S&P said.

While the first-lien issue-level rating remains one notch higher than the company's B- corporate credit rating on the company, the issuance of incremental first-lien notes continues to pressure the recovery prospects for first-lien creditors and recovery prospects are currently at the very low end of the 70% to 90% range for a 2 recovery rating, the agency said.

Although there remains some room for additional first-lien debt within the current recovery rating, any subsequent meaningful first-lien debt issuance beyond these notes not fully used to repay existing first-lien debt likely would result in a revision of the first-lien senior secured debt recovery rating to 3 from 2 and lowering the rating to B- from B, S&P added.

The ratings also consider its highly leveraged financial risk profile and satisfactory business risk profile, the agency said.

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