Moody's changes MTR outlook to negative

Moody's Investors Service said it revised the outlook of MTR Gaming Group, Inc. to negative from stable and affirmed the company's corporate family rating at B3, probability of default rating at B3-PD, senior secured second-lien notes at B3 (LGD4) and speculative grade liquidity rating at SGL-3 following the closing of its merger with Eldorado Resorts, LLC (B2/negative).

The agency said the outlook change reflects the company's declining revenue (down 5.7%) and EBITDA (down 12.8%) for the first six months of 2014 and Moody's expectation that these trends will not improve over the near term. Moody’s predicted that MTR's leverage will increase to about 7 times over the next 12 to 18 months from 6.3 times as of June 30.

MTR's B3 corporate family rating reflects the company's high leverage and weak interest coverage, small scale in terms of revenue and significant customer concentration, the agency said. Also considered is Moody’s view that consumer spending on gaming is not expected to improve materially over the near term.

Positive consideration is given to MTR's good cash balances and positive free cash flow, Moody’s said.

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