Standard & Poor's Ratings Services on Friday lowered its ratings on privately held casino operator Harrah's Entertainment Inc. following its offer to exchange an unspecified amount of debt for up to $2.8 billion in new notes.
The company made the offer to lower its debt obligations and have more time to pay back lenders.
S&P cut the company's corporate credit rating to "CC" from "CCC."
The rating outlook is negative.
A "CC" rating indicates very high levels of credit risk.
S&P said in some cases an exchange for the new notes would represent a substantial discount to the par amount of the outstanding issue.
"We view the exchange and tender offers as being tantamount to default given the distressed financial condition of the company and our previously stated concerns around Harrah's ability to service its current capital structure over the next several quarters absent this exchange offer," S&P said in a statement.
Harrah's Entertainment Inc. has struggled with financing since last year when the casino industry started seeing big cutbacks in consumer spending.
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