S&P downgrades Station

Standard & Poor's said it lowered the corporate credit rating on Station Casinos Inc. to D from CC and its 6½% senior subordinated notes to D from C. Ratings remain on CreditWatch, where they were placed with negative implications Nov. 26.

The downgrades stem from the company's announcement that it did not make the Feb. 1 interest payment on its 6½% senior subordinated notes, according to the agency.

A payment default has not occurred since there is a 30-day grace period to make the payment but the agency said it considers a default to have occurred when the nonpayment is a function of the borrower being under financial stress, the agency noted.

"Given our understanding of the plans for the reorganization, including proposed amendments to the senior secured bank facility and [commercial mortgage-backed securities] debt structure, it is our preliminary expectation that, in the event the restructuring plan succeeds, and upon Station's emergence from bankruptcy, the corporate credit rating would be at the lower end of the B category," S&P analyst Ben Bubeck said in a statement.

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