Fitch lifts MGM Resorts, rates notes B, loan BB

Fitch Ratings said it assigned a B rating with a recovery rating of RR4 to the proposed $1 billion in senior unsecured notes due 2021 being issued by MGM Resorts International.

Fitch also said it upgraded MGM's issuer default rating to B from B-, senior secured notes due 2013, 2014, 2017 and 2020 to BB with a recovery rating of RR1 from BB- with a recovery rating of RR1, senior credit facility to B+ with a recovery rating of RR3 from B with a recovery rating of RR3, senior unsecured notes to B with a recovery rating of RR4 from B- with a recovery rating of RR4, convertible senior notes due 2015 to B with a recovery rating of RR4 from B- with a recovery rating of RR4 and senior subordinated notes to CCC+ with a recovery rating of RR6 from CCC with a recovery rating of RR6.

MGM Grand Paradise's issuer default rating also was upgraded to BB- from B+.

MGM China Holdings, Ltd. and MGM Grand Paradise SA's issuer default ratings also were upgraded to BB- from B+ and senior secured credit facility to BB+ from BB with a recovery rating of RR2.

The outlook remains positive.

MGM also announced a new senior secured credit facility comprised of $2.75 billion in term loans and up to $1.25 billion in revolver capacity, Fitch said.

Fitch said it expects to rate the facility BB with a recovery rating of RR1 when the facility is finalized with the rating being predicated on the assumption that a majority of the collateral supporting the senior secured notes will be granted to the lenders.

The proceeds from the notes, along with about $3 billion in proceeds from a new credit facility and $800 million in cash on hand, will be used to tender for MGM's senior secured notes and to repay about $1.27 billion outstanding on existing credit facility, the agency said.

The upgrades reflect the anticipated interest-cost savings resulting from this transaction, which Fitch said it estimates at about $200 million annually.

The upgrade also considers the improved pro forma liquidity and slightly reduced gross leverage, the agency said.

The transaction addresses the largest maturities through 2014 with only $1.2 billion remaining through that timeframe, Fitch said.

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