Boyd's debt ratings lowered

Jul 1, 2008 7:00 PM

Casino Earnings by Ray Poirier | The news was both good and, well, not so good for Boyd Gaming Corp. (BYD) last week.

On the good side was the announcement that the company had opened its $400 million spectacular in Atlantic City. Style and sophistication described The Water Club, a signature hotel adjacent to the Borgata Hotel Casino and Spa which Boyd owns jointly with MGM MIRAGE Inc. (MGM).

On another front, however, was the news that Standard & Poor’s Ratings Services had lowered its outlook on Boyd Gaming debt ratings to "negative" from "stable." The ratings firm cited "an expected spike in leverage in 2010" as the reason for the rating’s change.

A credit analyst said Boyd Gaming had not arranged financing for the two joint-venture components of its Echelon Resort complex on the Las Vegas Strip as yet. The costs of the joint project, which is owned with Morgans Hotel Group, are expected to total $1.5 billion.

It was the analyst’s opinion that if the financing were not secured "in the near term," the delay could make it difficult for the company to complete these portions of the project by the third quarter of 2010. This, he felt, would "strain the company’s financial performance."

Despite the rating’s change, however, Boyd Gaming was confident that ongoing arrangements would be completed in time.

"We feel good about our ability to finance the Morgans’ piece," said company spokesman Rob Stillwell. "As long as we get it done this year, it will not change the opening of Echelon. Both companies are very committed to the project."

The news didn’t help the company’s share price during trading on Friday. At the end of the day, BYD shares were selling at $12.40 each.

The Water Club, described as Atlantic City’s "first boutique-lifestyle" hotel, features 800 rooms and suites, all with water views, a two-story spa on the 32nd floor, and restaurants with world-renowned chefs. There also are six designer retail shops and five heated indoor and outdoor pools.