S&P cuts MGM Mirage, Mandalay

Standard & Poor's said it lowered its ratings on MGM Mirage, including its corporate credit rating, to BB from BB+ following the closing of the company's $7.9 billion debt-financed acquisition of Mandalay Resort Group.

At the same time, the senior unsecured and subordinated debt ratings on Mandalay Resort Group were lowered to BB from BB+ and B+ from BB-, respectively.

Mandalay is now a wholly owned subsidiary of MGM, and its senior unsecured debt will benefit from guarantees by most subsidiaries of MGM.

S&P said the downgrade on MGM reflects the increase in financial leverage that has occurred as a result of the transaction and S&P's assessment that future development projects may result in MGM's debt leverage remaining above 5x, more consistent with the new ratings.

Still, S&P said it believes that the acquisition improves the overall business position of MGM by substantially expanding its presence in Las Vegas, the most widely recognized gaming market in the world.

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