Moody’s Investors Service is reviewing the credit rating of Mohegan Gaming & Entertainment for a possible downgrade.
According to Moody’s “The review for downgrade considers that Mohegan has not been able to reduce debt/EBITDA on a Moody’s adjusted basis to 4.5 times prior to the opening of MGM Springfield.” This may be a byproduct of increased competition in the Northeast, such as the opening in August of the MGM Springfield in Massachusetts, which markets itself as more conveniently located than the Mohegan Sun and Foxwoods, both Indian casinos in Connecticut.
On the plus side, Moody’s says it sees “as a long-term positive for the company” efforts to diversify by developing a casino resort in South Korea.
Mohegan’s Vice-President of Corporate Finance Christopher Jones told Asia Gaming Brief, “The higher leverage is reflective of our commitment to Inspire Korea and the Korean government. With Mohegan becoming a 100 percent shareholder of Inspire Korea earlier in the year, we increased our equity contribution to the Incheon-based development, resulting in modestly higher leverage at the Mohegan parent company.”
Jones added that the recent opening of the MGM Springfield has had less of a negative effect on the Mohegan Sun’s bottom line than had been feared. Additionally, the tribe acquired the right to Niagara Casino “bundle” from Ontario Lottery and Gaming Corporation (OLG) further diversifying the tribe’s assets.
The effects of this will be seen beginning in 2019, said Jones. “We believe that adjusting for these items and other on-going initiatives, we are more than comfortable with our leverage levels.”
