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November 10, 2009

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DCR downgrades debt

Friday, Sept. 10, 1999 | 10:52 a.m.

Duff & Phelps Credit Rating Co. downgraded its rating on $950 million of Mirage Resorts Inc. debt Thursday, citing lower-than-expected cash flow.

The downgrade, to BBB from BBB+, maintains DCR's investment-grade ratings for Mirage's senior notes and debentures. DCR also reaffirmed the company's commercial-paper rating at D-2.

But DCR said it's concerned that Mirage's Las Vegas properties generated disappointing cash flow despite the market's strong fundamentals and had a slow start for its Beau Rivage resort in Biloxi, Miss.

The rating agency also noted that Mirage's debt rose to $2.5 billion, a bit higher than expected, during construction of Beau Rivage and Bellagio, the $1.6 billion resort on the Las Vegas Strip.

However, DCR said, Mirage used proceeds of a $400 million equity offering in May to reduce debt to about $2.1 billion.

Given increased visitor volume, occupancy rates and casino gaming revenue for the overall Las Vegas market this year, DCR said it believes Bellagio hasn't performed as expected and has taken more business from the Mirage's upscale customer base than expected.

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