HARTFORD, Connecticut — Moody's Investors Service has raised the credit outlook for the parent company of the Mohegan Sun casino in Connecticut, citing its ability to extend debt repayment until 2019 and putting it in a stronger position to face competition in Massachusetts.
The ratings agency on Wednesday raised the Mohegan Tribal Gaming Authority's outlook from negative to stable.
By extending about $827 million in debt from 2018 to 2019, the company can continue cutting debt before MGM Resorts International opens an $800 million casino complex in nearby Springfield, Massachusetts, Moody's analyst Keith Foley said. The company will generate enough cash to repay loans before their due date, he said.
"There's a lot less risk in my mind to refinance debt," he said.
The gaming authority, which also operates a casino in Wilkes-Barre, Pennsylvania, is in a stronger position to face competition from MGM's planned casino in Springfield, Foley said.
Massachusetts regulators approved last week a request by MGM to delay the opening of the Springfield casino for a year. That decision "will add another level of flexibility" for the Mohegan tribal authority's efforts to cut debt before it faces the new competition, Foley said.
Reducing debt and extending other loans is a "good defensive position" that could help Mohegan Sun absorb the competitive hit from the MGM casino, he said.
"Try to get your financial house in order to prepare for the next downturn or big competition," Foley said.
Mohegan Sun last month reported a strong third-quarter increase in profit, citing a spike in slot machine and table game use and cost-cutting. Foley credited the casino's improved earnings to lower costs.
Several Indian-run casinos have worked to refinance debt for expansion plans after being caught short at the start of the recession in December 2007.
Moody's raised its outlook for the gambling industry last month from negative to stable, citing improved earnings before taxes. Revenue appears to have stabilized in Connecticut and the rest of the country, Moody's said.
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