S&P upgrades Mohegan

Standard & Poor's said it raised its corporate credit rating on Mohegan Tribal Gaming Authority to B- from SD. The outlook is stable.

At the same time, the agency said it took the following issue-level rating actions:

• Assigned a B- issue-level rating to Mohegan's new $475 million credit facility, comprising a $75 million revolving credit facility and a $400 million term loan due March 31, 2015;

• Assigned a CCC+ issue-level rating to Mohegan's new $225 million first-lien, second-out term loan, which matures March 31, 2016;

• Assigned a CCC issue-level rating to the new notes offered as part of the exchange offers, including $199.8 million 11.5% second-lien senior secured notes due 2017, $417.8 million 10.5% third-lien senior secured notes due 2016 and $344.2 million 11% senior subordinated toggle notes due 2018;

• Raised the issue-level ratings on Mohegan's old notes, including the senior notes due 2013, and subordinated notes due 2012, 2014 and 2015, to CCC from D;

• Raised the issue-level rating on Mohegan's old second-lien senior secured notes to CCC from CCC- and removed the rating from CreditWatch, where it had been placed with developing implications on Jan. 25; and

• Raised the issue-level rating on the Mohegan Tribe of Indians' priority distribution bonds to B from CCC+ and removed the rating from CreditWatch.

"The upgrade to B- reflects our reassessment of the Authority's capital structure following the completion of its comprehensive debt refinancing plan," said S&P credit analyst Melissa Long in a news release.

"However, MTGA is still highly leveraged and the transaction weakens interest coverage somewhat given the higher cost of debt in the post-exchange capital structure," Long said.

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