Moody's: Peninsula Gaming outlook negative

Moody's Investors Service said it revised Peninsula Gaming, LLC's outlook to negative from stable and affirmed its corporate family and probability-of-default ratings at B1.

The company has $240 million senior secured notes due 2015 rated Ba2 (LGD2, 26%) and $305 million senior unsecured notes due 2017 rated B3 (LGD5, 78%).

The outlook revision reflects growing concern that the company may not be able to achieve total debt-to-EBITDA ratio near 4.5 times by the end of fiscal 2010, the agency said.

"The negative revenue trend in the Louisiana market accelerated in the fourth quarter and remains weak year to date in 2010 and we are concerned that PGL's earnings may be further pressured from that market in 2010," Moody's analyst John Zhao said in a statement.

The company's current debt-to-EBITDA ratio of 5.8 times is high for the B1 rating, according to the agency.

The affirmation of the B1 corporate family rating reflects expectation that the company will continue to generate solid free cash flow, albeit at a lower level, the majority of which is expected to be used for permanent debt reduction, the agency said.

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