Bond sale hurt by war fears

Tuesday, March 4, 2003 | 11:13 a.m.

NEW YORK -- Donald Trump, whose Trump Hotels & Casino Resorts Inc. plans to sell $475 million of junk-rated notes, faces investors reluctant to buy casino debt as war, higher taxes and new competition threaten to squeeze profits.

Casino bonds rated below investment grade like those of Trump have barely broken even this year and yields have surged, while junk bonds overall have returned almost 5 percent, Merrill Lynch & Co. data shows. Gaming companies would be hurt by a U.S.-led war in Iraq because fewer people would visit casinos, and weakness in the economy means gamblers have less money, some investors said.

Trump, who pulled an offering in May when he wouldn't pay higher yields demanded by investors, needs the cash to repay debt, including a $242 million obligation maturing in November of his Trump Marina casino in Atlantic City. Trump said he wanted to issue the notes early in the year and that the more he has waited, the higher casino debt costs have risen.

"The only person bringing a deal is someone who has to bring a deal, and that's Trump," said Tom Parker, who helps manage $1 billion of below investment-grade debt at Barclays Global Investors in San Francisco.