Moody's downgrades Gaylord

Moody's Investors Service said it downgraded Gaylord Entertainment Co.'s corporate family and probability-of-default ratings to B3 from B2 and its $225 million 6¾% senior global notes due 2014 and $350 million 8% senior global notes due 2013 to Caa2 (LGD5, 86%) from Caa1 (LGD5, 83%). The SGL-2 speculative-grade liquidity rating was affirmed.

The outlook was revised to stable from negative.

Moody's said the downgrade reflects its view that despite the ramp-up of the Gaylord National, the recently announced weaker-than-expected operating performance will result in weaker-than-anticipated debt-protection measures for a period longer than first believed.

The B3 corporate family rating reflects Gaylord's weak debt protection measures, limited diversification, modest scale and history of pursuing a relatively aggressive growth and acquisition strategy, the agency said.

The ratings are supported by the sizeable contribution from food and beverage to total RevPAR, solid brand recognition, reasonably good asset value and good liquidity, Moody's said.

The stable outlook reflects the agency's view that the B3 corporate family rating sufficiently captures the credit risk given the expected level of debt-protection measures and liquidity.

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