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July 24, 2020

Foxwoods operator gets ratings downgrade

HBJ Photo | Joe Cooper Foxwoods Resort Casino in Mashantucket.

A major debt-rating agency downgraded its outlook on the Mashantucket Pequot tribe's outstanding bond debt following a major decline in gaming and entertainment profits at Foxwoods Resort Casino during the COVID-19 pandemic.

The debt rating downgrade by S&P Global Ratings comes as the Mashantucket tribe extended the maturity of its short-term loan from June 30 to Dec. 31, the Wall Street agency said.

Analysts from S&P said the extension resulted in the agency lowering its issue-level rating on the term loan to 'D' from 'CCC.'

The agency added that it expects to raise the issue-level rating on the loan to 'CCC' in the coming days to reflect the ongoing risk of a conventional default. Its credit rating on the tribe will remain 'SD,' or selective default, due to its inability to make full and timely debt service payments to its junior debtholders.

“We view the maturity extension as tantamount to a default because investors are receiving less than the original promise without adequate offsetting compensation," S&P said in a release Tuesday. 

In mid-March, Foxwoods and nearby Mohegan Sun casino were forced to shut down temporarily to limit the spread of the novel coronavirus.

The casinos said they spent millions of dollars on new personal protective equipment to safeguard employees and guests, and partially reopened on June 1 despite objections from Gov. Ned Lamont.

During their first month of operation amid the pandemic, Foxwoods said it posted June slot revenues of nearly $33.6 million, a year-over-year decrease of 4.9%. 

The amount slot bettors wagered in June, known as the "handle," was $377.1 million, also down 13.5% from $436.1 million in June 2019.

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