Moody's rates Graton loan B2

Moody's Investors Service assigned a B2 (LGD4) rating to Graton Economic Development Authority's proposed $225 million senior secured term loan B due 2022 and affirmed its B2 corporate family rating, its B2-PD probability of default rating and the B2 (LGD4) rating on its $450 million 9 5/8% senior secured notes due 2019. The outlook is stable.

The proposed term loan B, a proposed $200 million add-on to its $309 million senior secured term loan A, a $25 million draw on its $125 million committed senior secured revolver due 2019 and $45 million of cash on hand will be used to refinance the company's $450 million senior secured notes.

The agency said Graton's B2 corporate family rating reflects the authority's small size in terms of revenue and single-asset profile, competition from several large casinos already operating in its primary market area and credit risks that are common to Native American gaming issuers, including uncertainty as to enforceability of lenders’ claims in bankruptcy or liquidation.

Positive ratings consideration is given to the casino's strong pro forma interest coverage, modest leverage metrics, high profitability compared to other rated peers and strategic location as the closest class III gaming facility to the San Francisco Bay area, Moody’s said.

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