Wednesday, December 23, 2009

How low do bond ratings go?

So the PG had a story yesterday on how the bond rating for the Rivers Casino was downgraded yet again.

Note that the downgrade happened last month.  Not sure why nobody caught it until now, but you really have to read that story realizing it is about a report written a month ago to fully appreciate what it means.  The rating was dropped not just one notch, but two.. from BB to CCC. CCC being what is deep into what are called "junk bonds". It's not their worst rating, but there is not much farther you can go without literally defaulting on something...  CCC technically is: "currently vulnerable and dependent on favorable economic conditions to meet its commitments".  So things are horrible, but there is still hope might be a better way to phrase it.

Now take into account this was all last month's news and reread the story with that in mind you.  The story quotes the S&P folks as writing the following (reflective of data through November 24th:
...the agency said the average win per machine had fallen from a peak of $250 to about $180 by the week ending Nov. 15.
Unless there's a "significant improvement in operating performance from that observed to date" the casino might not be able to generate enough cash to meet fixed charges, which include the arena payment, in excess of $55 million next year, S & P stated.
Let's parse....   The drop from 250 to 180 per day is a drop of 28%. That seemed to be of concern to them.   Since then the daily take has not shown a "significant improvement", has not shown any rebound whatsoever, has not even stabilized, and has dropped a further 22% to $140 per machine per day as was just released.  Seriously, what would the S&P folks say if they were rewriting that report today?

Yes I know, I know... tables games are going to save us.  or not?  I also realize it's cold which is probably impacting traffic down there.  But you know, it's going to be cold for months and I bet it's cold this time next year.  So cold happens and if they really expect a daily average closer to $300 per machine per day yet have these depressed months.. how much would they have to bring in during whatever their peak season is to compensate?

Gonna try a test and embed my Casino Watch google gadget below.  If it does not work, you can get it directly via this link.


Anonymous StackedDeck said...

Table games anyone?

Thursday, December 24, 2009 3:12:00 AM  
Blogger Grimace said...

If their bond rating goes any lower it might be the same as the city's!
(a bit of exaggeration for effect)

Thursday, December 24, 2009 8:23:00 PM  

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