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PLEASE READ AND SCROLL DOWN!

 

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

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2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

 

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Related Issuers
Rating Action:

Moody's downgrades CBAC Gaming's CFR to Caa2 from Caa1; outlook negative

23 Mar 2020

New York, March 23, 2020 -- Moody's Investors Service today downgraded CBAC Gaming, LLC's ("CBAC") Corporate Family Rating ("CFR") to Caa2 from Caa1 and Probability of Default Rating to Caa2-PD from Caa1-PD. The company's senior secured revolver and term loan were downgraded to Caa2 from Caa1. The outlook is negative.

The downgrade of CBAC's CFR is in response to the disruption in casino visitation resulting from efforts to contain the spread of the coronavirus including recommendations from federal, state and local governments to avoid gatherings and avoid non-essential travel. These efforts include mandates to close casinos on a temporary basis. The downgrade also reflects the negative effect on consumer income and wealth stemming from job losses and asset price declines, which will diminish discretionary resources to spend at casinos once this crisis subsides.

Downgrades:

..Issuer: CBAC Gaming, LLC

.... Corporate Family Rating, Downgraded to Caa2 from Caa1

.... Probability of Default Rating, Downgraded to Caa2-PD from Caa1-PD

....Senior Secured Bank Credit Facility, Downgraded to Caa2 (LGD3) from Caa1 (LGD3)

Outlook Actions:

..Issuer: CBAC Gaming, LLC

....Outlook, Changed To Negative From Stable

RATINGS RATIONALE

CBAC's Caa2 CFR reflects the meaningful earnings decline over the next few months expected from efforts to contain the coronavirus and the potential for a slow recovery once properties reopen. The rating also reflects the company's small, single property, geographically concentrated gaming operations, high debt/EBITDA relative to its scale of operations and competition from the expansion of Live!, its closest competitor, and MGM's National Harbor casino. CBAC's gaming revenue was pressured due to competition in the market even before the coronavirus outbreak. As a casino operator, social risk is elevated, as evolving consumer preferences related to entertainment choices and population demographics may drive a change in demand away from traditional casino-style gaming. Positive credit consideration is given to the population density of the Washington D.C. to Baltimore area that should enable the market to eventually absorb the new supply and management by Caesars and access to its loyalty program.

Moody's views the company's liquidity as weak because of the expected decline in earnings and cash flow and high risk of a covenant violation. On March 16, 2020, the company fully drew down its $15 million revolving credit facility to supplement its approximately $40 million cash balance (asof 9/30/19). Because EBITDA and free cash flow will be negative for an uncertain time period, liquidity and leverage could deteriorate quickly over the next few months. The company's revolver matures in 2022 and term loan in 2024.

The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The gaming sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in CBAC's credit profile, including its exposure to travel disruptions and discretionary consumer spending have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and CBAC remains vulnerable to the outbreak continuing to spread.

Moody's regards the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety. Today's action reflects the impact on CBAC of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered.

The negative outlook considers that CBAC remains vulnerable to travel disruptions and unfavorable sudden shifts in discretionary consumer spending and the uncertainty regarding the timing of facility re-openings and the pace at which consumer spending at the company's properties will recover.

Ratings could be downgraded if liquidity deteriorates or if Moody's anticipates CBAC's earnings declines to be deeper or more prolonged because of actions to contain the spread of the virus or reductions in discretionary consumer spending.

A ratings upgrade is unlikely given the weak operating environment. However, the ratings could be upgraded if the facilities reopen and earnings recover such that positive free cash flow and reinvestment flexibility is restored and debt-to-EBITDA is sustained below 8.0x.

CBAC Gaming, LLC is a joint venture whose members consist of CR Baltimore Holdings, LLC (CRBH), CVPR Gaming Holdings, LLC, and PRT Two. CRBH is a joint venture between Caesars Baltimore Investment Company, LLC and Rock Gaming Mothership, LLC. CBAC developed and opened the Horseshoe Baltimore casino in Baltimore, MD on August 26, 2014. Horseshoe Baltimore features more than 2,200 slot machines, including more than 150 video poker machines, a 25-table WSOP Poker Room and over 150 table games. A wholly owned subsidiary of Caesars Operating Co., LLC manages the property. CBAC is a private company that does not disclose financial information to the public.

The principal methodology used in these ratings was Gaming Industry published in December 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Adam McLaren
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

John E. Puchalla, CFA
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​
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