Gaming was the most active sector in Moody's Investors Service's August
report on liquidity of speculative-grade companies, released Friday.
The report reflects ratings changes and additions to Moody's liquidity
watch during July, when the gaming business saw two downgrades and five
newcomers to the list of companies with speculative-grade liquidity.
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"In the casino industry, liquidity is coming under increasing pressure
as consumers tighten up on leisure travel," Moody's states.
"Las
Vegas is seeing fewer visitors, shorter stays and lower spending per
visit," the report continues. "Regional casino markets, which visitors
typically reach by car, are exposed to the high price of gasoline."
In
July, Moody's dropped Las Vegas Sands Corp. to speculative grade
liquidity level 3, which denotes that a company has adequate liquidity
but has "only a modest cushion" and may need to have its debt covenants
loosened. Meeting its debt-to-Ebitda covenants will be challenging in
the next few quarters, given the environment on the Vegas Strip.
Meanwhile,
Station Casinos Inc. fell two notches, to SGL 4, indicating weak
liquidity. The agency voiced concern that the company could trip debt
or interest covenants by the end of 2008 and therefore might need "accommodation from its lenders in a stressed credit environment." - Chris Nolter
