S&P cuts Station Casinos to B+

S&P said it lowered its corporate credit rating on Station Casinos LLC to B+ from BB- and lowered all issue-level ratings one notch in conjunction with the downgrade of the corporate credit rating.

The outlook is stable.

The agency said the downgrade of Station reflects an expectation that the company’s leverage will be sustained in the low-5x area for a prolonged period of time (at least through 2018) due to higher debt to fund increased investment capital spending to complete renovations at Palace Station and the first phase of redevelopment at the Palms Casino Resort.

“Additionally, the downgrade reflects our view that the company's risk tolerance is higher over the next two years than we previously expected and that Station could pursue additional possible investment spending for an additional phase of redevelopment at the Palms,” S&P said in a news release.

“Despite the additional leverage, Station's strong interest coverage and good liquidity position support the rating.”

The agency said the stable outlook reflects an expectation that, despite an elevated level of capital spending for property renovations through 2018 and the resulting disruption in operations at those properties, Station's leverage will remain in the low-5x area through 2018 and EBITDA coverage of interest will remain strong at over 4x.

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