S&P lifts Gateway to stable

Standard & Poor’s said it revised the outlook on Gateway Casinos and Entertainment Ltd. to stable from negative.

The agency also said it affirmed the company’s B+ long-term corporate credit rating.

The agency also said it affirmed the BB rating on Gateway’s first-lien senior secured debt. The 1 recovery rating on the debt is unchanged, indicating 90% to 100% expected default recovery.

S&P also said it affirmed the B+ rating on the company’s second-lien senior secured debt. The 4 recovery rating on the debt is unchanged, indicating 30% to 50% expected default recovery.

The outlook revision reflects higher year-to-date earnings and improved forecast credit measures, the agency said.

Gateway will face some pressure on its covenant cushion because of annual step-downs combined with high capital spending, S&P said.

But the company is expected to either reduce capital spending or sell surplus assets to fund its capital expenditure if it doesn’t generate sufficient cash flow to support growth, the agency said.

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