Moody's gives B3 to Gun Lake loan

Moody's Investors Service said it assigned B3 corporate family and probability-of-default ratings to the Gun Lake Tribal Gaming Authority and a B3 rating (LGD3, 48%) to Gun Lake's proposed $160 million senior secured first-lien term loan due 2015.

The outlook is stable.

Proceeds will be used to finance the remaining costs associated with the construction and opening of the Gun Lake Casino in Bradley, Mich., and repay a portion of existing outstanding debt.

Gun Lake's B3 corporate family rating reflects the risk associated with a ground-up, single asset casino development, the agency said.

Ratings also consider the unique risks common to Native American gaming issuers including cash distribution obligations, the high degree of uncertainty regarding the enforceability of claims and the value of collateral, the agency noted.

Other risks include the effectiveness of a tribe's waiver of sovereign immunity, the agency noted.

Ratings also reflect Gun Lake's favorable location and the demographic profile of its target market, formal restrictions on competition in the casino's primary market area and the casino project's good liquidity, Moody's said.

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