Moody's lowers Mohegan Tribal Gaming

Moody's Investors Service said it lowered the Mohegan Tribal Gaming Authority's corporate family and probability-of-default ratings to B3 from B2, $250 million senior notes to B1 (LGD3, 32%) from Ba3 (LGD3, 30%) and $957 million senior subordinated notes to Caa2 (LGD5, 79%) from Caa1 (LGD5, 80%).

This concludes the review that began Feb. 3, and the outlook is negative.

The agency said the downgrade is based on the expectation that weak visitation and spending trends in the Connecticut gaming market will make it difficult for the authority to meaningfully reduce leverage over the near to medium term to levels acceptable to the prior rating. The debt-to-EBITDA ratio for the 12-month period ended Dec. 31 was nearly 8 times.

The negative outlook reflects Moody's concerns that weak gaming demand will continue and this trend may constrain operating performance and force the authority to seek covenant relief during 2009.

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