Moody's rates MGM Mirage note Ba2

Moody's Investors Service said it assigned a Ba2 rating with a loss-given-default assessment of LGD3 (43%) to MGM Mirage's new $750 million senior unsecured guaranteed notes due 2017, raised the speculative grade liquidity rating to SGL-2 from SGL-3 and affirmed the company's existing ratings.

The outlook is stable.

Proceeds of the notes will be used to term out existing bank revolver debt.

MGM Mirage is expected to be a net borrower over the next few years due to high capital spending needs for maintenance, CityCenter in Las Vegas, a permanent gaming facility in Detroit, as well as investment spending for joint venture projects. Nevertheless, Moody's said it expects that MGM Mirage will continue to grow its return on assets and maintain a debt-to-EBITDA ratio of around 5.5x over the next two years.

The agency said that while MGM Mirage's credit metrics and level of geographic diversification are below average for the current rating, these risks are offset by the company's size, significant and successful development profile and solid EBITDA margins.

The upgrade of the speculative grade liquidity rating is based on the additional liquidity cushion that MGM Mirage will have following the $750 million note issuance and the subsequent repayment of outstanding revolver loans, Moody's said.

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