Fitch ups Marina District IDR, rates loan BB-

Fitch Ratings said it assigned a BB-/RR2 rating to Marina District Finance Co., Inc.'s (Borgata) $650 million senior secured incremental term loan due 2023 and upgraded Borgata's issuer default rating to B from B-.

The agency also affirmed Boyd Gaming Corp.'s and Peninsula Gaming LLC's issuer default ratings at B.

Marina District’s outlook was revised to stable from positive. Boyd's and Peninsula's outlooks remain stable.

Fitch said the upgrade of Marina District’s issuer default rating reflects improved operations. The Atlantic City market's surviving eight casinos, including Marina District, benefitted from the closure of four casinos in 2014, which removed excess capacity out of the market. Atlantic City also had about three years to adjust to the new competition in surrounding jurisdictions without significant new casino openings in the interim period.

As a result of the easing competitive environment and property tax adjustments, Marina District’s last 12-month EBITDA for the period ending March 31 improved to $173 million from a trough EBITDA of $113 million in fiscal year 2013. Accordingly, free cash flow improved to $74 million from $34 million, helped by reduced interest cost related to a refinancing and debt reduction.

Leverage is 4.2 times as of March 31, which, together with further reduction in debt, provides cushion against moderate operating pressure in the future.

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