S&P raises Harrah's, rates notes CC

Standard & Poor's said it raised its corporate credit rating on Harrah's Entertainment Inc. and its wholly owned subsidiary, Harrah's Operating Co. Inc., to CCC from SD.

The outlook is negative.

At the same time, the agency said it raised its issue-level rating on the existing senior secured second-priority, senior unsecured and subordinated debt issues of Harrah's subsidiaries to CC from D. The recovery rating on these securities remains at 6.

The agency said it also assigned Harrah's Operating's new $3.7 billion 10% senior secured second-priority notes due 2018 a rating of CC with a recovery rating of 6, adding that the ratings upgrade follows the conclusion of its review of the company's new capital structure following the recent settlement of its second below-par debt tender offer.

"Our CCC rating on the company incorporates the expectation that consolidated EBITDA will decline in the mid-teens percentage area in 2009, largely due to continued pressures on visitation and spending in the Las Vegas and Atlantic City markets," said S&P credit analyst Ben Bubeck.

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