S&P cuts Gaylord Entertainment

Standard & Poor's said it lowered its unsecured debt rating on Gaylord Entertainment Co. to B- from B and affirmed the B corporate credit rating.

The outlook is stable.

S&P said the downgrade of the senior unsecured debt rating to one notch below the corporate credit rating follows Gaylord's announcement that it has entered into a new $600 million senior secured bank facility that will replace the existing $100 million secured revolving bank facility. Given the expectation that priority debt will increase materially in the next few years as the new bank facility is drawn upon, the unsecured debt holders are now expected to be meaningfully disadvantaged under a simulated payment default scenario, warranting the rating distinction.

However, given the quality of Gaylord's hotels, a couple of which are fairly new, and the company's regional diversification, the assets are expected to retain enough value to limit the rating distinction between the secured and unsecured debt ratings to one notch, S&P said.

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