On January 10th 2018, the official credit rating and investment body Moody’s downgraded the credit rating of Casino Del Lago, which is based in the Finger Lakes. Whilst previously it had a respectable (though not stunning) rating of B3, as of January 10th its overall rating is now a more worrying Caa2. In addition, this casino family’s probability of default rating (a rating which indicates how likely the casino is to default on its debts) was lowered to Caa2-PD from its previously acceptable B3-PD. This news is likely to lead potential investors to be cautious at the least when it comes to dealing with the Casino Del Lago group. It is also likely to worry the casino’s creditors, who will now understand themselves to be less likely to be able to recover the debts that Casino Del Lago owes them. In sum, this casino’s financial outlook is now officially listed as ‘Negative’ whereas before it was listed as ‘Stable’.
The debts held by Casino Del Lago, which are affected by this new lowered rating, are estimated to be to the tune of $350 million. The casino is currently unlikely to be able to make good on its debts and alternative arrangements may need to be made. What is the problem here? The key problem is that though the casino has been growing, it has been doing so much more slowly than was expected. Casino Del Lago had been, it seems, planning its finances based on the assumption that its growth would continue apace, and as it has not it has swiftly landed into difficulty as a result of this miscalculation.
Casino Del Lago, which is owned and run by the Lago company, has also faced downgrades to other ratings. For example, its first secured bank rating is now Caa1 and its second secured bank rating is now Caa3 (whereas previously they were B2 and Caa2 respectively). In sum, the latest press releases demonstrate that this casino’s entire portfolio of financial prospects has been significantly downgraded. The casino has not been bankrupted, however. It continues to operate, and this provides some hope for it: with a sustained period of accelerated growth it may be able to improve its rating for the next time around.
