Las Vegas casino giant issuing notes

Wednesday, March 6, 2002 | 11:10 a.m.

Park Place Entertainment Corp. announced today it has priced a $375 million offering of senior subordinated notes. The sale is expected to close March 14.

The eight-year notes are priced to yield 7.875 percent. Park Place said it will use proceeds to pay down bank debt.

Standard & Poor's assigned a BB-plus rating to the notes, which is considered just below investment grade. At the same time, S&P affirmed its investment-grade BBB-minus corporate credit rating on Park Place, as well as its negative outlook.

Though S&P analyst Craig Parmelee said he believed debt reduction would be a "strategic priority" for the company over stock buybacks or growth opportunities, he warned a future downgrade remains possible.

"Park Place's capital structure is highly leveraged for the current rating level following the events of Sept. 11, despite its recent progress in reducing debt,"' Parmelee wrote. "Ratings could be lowered if debt balances are not reduced during 2002 or if operations do not begin to rebound, allowing credit measures to return to levels more consistent with current ratings."