Moody's downgrades MGM Mirage debt

LAS VEGAS, Nevada -- Moody's Investors Service today downgraded casino operator MGM Mirage $7.8 billion debt load Tuesday, believing that the company's earnings in 2009 will fall below previously anticipated results.

Moody's, in reducing the company's corporate family rating to B1 Ba3, said the recession is causing consumers to reduce discretionary spending.

"Additionally, the company has been unable to raise the targeted $3 billion in capital for its CityCenter development, and so its cash needs have increased," Moody's senior credit officer Peggy Holloway said in a statement.

She anticipated that MGM Mirage's debt to cash flow ratios will exceed "a level inconsistent with its prior rating."

In December, MGM Mirage announced it had sold Treasure Island for $775 million to former New Frontier owner Phil Ruffin. The deal is expected to close in June. While Moody's anticipates the sale proceeds will allow the company to meet its capital spending needs and service its bond maturities, the ratings service believes MGM Mirage's liquidity remains weak.

"We estimate that availability under the company's $4.5 billion revolving credit facility could drop below $300 million by year-end and would be insufficient to cover maturing bond debt of $1.1 billion in 2010," Moody's said in a statement.

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