S&P changes Gateway Casinos to negative

Standard & Poor's said it revised its outlook on Gateway Casinos & Entertainment Ltd. to negative from stable.

At the same time, the agency affirmed the company’s B+ long-term corporate credit rating, BB issue-level rating on the senior secured debt and B+ issue-level rating on the second-lien debt. The respective 1 and 4 recovery ratings on the debt are unchanged.

"We revised our outlook on Gateway because lower year-to-date earnings are causing weak credit measures amid elevated capital expenditures," S&P credit analyst Donald Marleau said in a news release.

"We believe that if this trend persists, Gateway could face some pressure on its covenant cushion because of annual step-downs that begin in 2015."

The company, however, generates fairly steady cash flow that should support increasing amortization on its term loan A, which the agency believes could insulate its credit profile from persistently soft earnings.

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