Friday, February 27, 2009

Moody's Takes MGM To Woodshed

Rating agencies just love reminding people they are still around. Oh well - for all CLOs who still base their investment strategy on these pentagram based reports, Moody's downgraded MGM Mirage's corporate family rating from B1 to B3, which "reflects the difficulty the company faces in shoring up its liquidity profile." Not at all surprising after this morning's revolver draw down news and the pounding MGM bonds have taken today (down 3-4 points). Some more harsh language here:
Moody's estimates that internally generated cash, net proceeds from the pending sale of Treasure Island together with the revolver draw and cash on hand will be barely sufficient to fund the company's operations -- including its CityCenter obligations -- and required bond maturities through year-end 2009. MGM faces bond maturities of approximately $300 million and $800 million in the second and third quarters of 2010, respectively. Additionally, the inability of the MGM and its joint venture partner, Dubai World, to raise the remaining $1.2 billion of the targeted $3.0 billion debt raise for CityCenter has exacerbated the MGM's liquidity situation.
We are all waiting for the day when the presidential suite in the Bellagio costs $99.95 including the bottle of champagne and the "personal attention" the suite is known to provide to its guests. Sphere: Related Content
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