MGM Gets The Tripple Hooks

Last night S&P downgraded MGM from B- to CCC. Didn't take much more than an impending default to stir the rating agency. S&P analyst Ben Bubeck discovered what even Kirk Kerkorian has known for years (and being 90+ years old, these things are expected to take some time).

"The downgrade reflects our belief that, given our projections for cash flow generation over the next few years, combined with substantial capital needs to fund the completion of CityCenter and to meet debt maturities, MGM MIRAGE's ability to service its current capital structure is in doubt,"

And some more insight on what the prospects for Vegas and the Strip in particular are:

"While the company maintains a leading presence on the Las Vegas Strip, we expect the Strip to be among the weakest performing U.S. gaming markets in 2009. The company's ability to weather the current downturn relies on a moderation of the revenue and cash flow declines recently observed across the industry, which we believe is unlikely until at least 2010, or a restructuring of its debt obligations. As of Dec. 31, 2008, operating lease-adjusted total debt to EBITDA, excluding income from unconsolidated affiliates, was 7.5x."

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