Announcement: Moody’s upgrades Boyd’s speculative grade liquidity score to SGL-2
World Credit score Analysis – 11 Dec 2020
New York, December 11, 2020 — Moody’s Traders Service immediately upgraded Boyd Gaming Company’s (“Boyd”) Speculative Grade Liquidity score to SGL-2 from SGL-4. The corporate’s Company Household Ranking (“CFR”) of B2, Chance of Default Ranking of B2-PD, present senior secured revolver and time period loans rated Ba3, and present senior unsecured notes rated Caa1 are unchanged. The outlook stays adverse.
The improve to Boyd’s speculative-grade liquidity score to SGL-2 from SGL-4 was pushed by the corporate’s current maturity extension of its revolving credit score facility and time period mortgage A to September 2023 from 2021. The improve to the SGL moreover displays that largely all the corporate’s casinos have reopened and have demonstrated EBITDA margin enchancment, whereas producing sturdy free money circulation of practically $150 million for the current quarter. As of September 30, 2020, the corporate had $506 million of money, and an undrawn revolving credit score facility with $933 million of availability. Efficient October 8, 2020, the corporate elevated its revolving credit score facility capability to $1,033.7 million from $945.5 million. Moody’s estimates the corporate may preserve enough inner money sources after upkeep capital expenditures to fulfill required annual amortization and curiosity necessities assuming a sizeable decline in annual EBITDA. Boyd is at present topic to a minimal liquidity requirement of $250 million, as typical monetary upkeep covenants are waived till Q2 2021. Moody’s believes the corporate will preserve compliance with the minimal liquidity covenant and the leverage and curiosity protection monetary covenants as soon as they resume in Q2 2021.
The next scores/assessments are affected by immediately’s motion:
..Issuer: Boyd Gaming Company
…. Speculative Grade Liquidity Ranking, Upgraded to SGL-2 from SGL-4
Boyd’s B2 CFR displays the significant earnings decline from efforts to include the coronavirus and the potential for a sluggish or uneven restoration as properties reopen. Boyd’s properties have largely reopened with its Las Vegas locals and Midwest and South areas performing higher than Downtown Las Vegas given demand ranges and expense reductions. The score additionally displays the corporate’s vital measurement and geographic diversification. The corporate is the second-largest regional gaming operator by way of internet income and variety of on line casino property operated. Key credit score issues embrace Boyd’s vital leverage previous to the coronavirus outbreak and longer-term social threat and basic challenges dealing with Boyd and different regional gaming firms associated to shopper leisure preferences and US inhabitants demographics that Moody’s believes will transfer in a course that doesn’t favor conventional casino-style gaming.
The coronavirus outbreak, the federal government measures put in place to include it, and the weak world financial outlook proceed to disrupt economies and credit score markets throughout sectors and areas. Moody’s evaluation has thought-about the impact on the efficiency of Boyd from the present weak US financial exercise and a gradual restoration for the approaching yr. Though an financial restoration is underway, it’s tenuous, and its continuation can be carefully tied to containment of the virus. In consequence, the diploma of uncertainty round our forecasts is unusually excessive. Moody’s regards the coronavirus outbreak as a social threat underneath our ESG framework, given the substantial implications for public well being and security. The gaming sector has been one of many sectors most importantly affected by the shock given its sensitivity to shopper demand and sentiment. Extra particularly, the weaknesses in Boyd’s credit score profile, together with its publicity to journey disruptions and discretionary shopper spending have left it susceptible to shifts in market sentiment in these unprecedented working circumstances and Boyd stays susceptible to the outbreak persevering with to unfold.
Governance threat is taken into account balanced given public possession and the corporate’s monitor report of managing dividends and share repurchases principally from money circulation. The corporate suspended its quarterly money dividend to preserve liquidity as a result of affect of coronavirus on the corporate’s operations. From a leverage and monetary coverage perspective, with a number of vital acquisitions behind the corporate, Boyd had been in a position to cut back debt-to-EBITDA leverage to about 5x earlier than the pandemic pushed leverage up over 7x as of September 2020.
The adverse outlook considers that Boyd stays susceptible to journey disruptions and unfavorable sudden shifts in discretionary shopper spending and the uncertainty concerning the consistency and tempo at which shopper spending and degree of gaming exercise on the firm’s properties will recuperate.
Scores could possibly be downgraded if liquidity deteriorates or if Moody’s anticipates Boyd’s earnings declines to be deeper or extra extended due to actions to include the unfold of the virus or reductions in discretionary shopper spending.
A scores improve is unlikely given the unsure working surroundings. Nevertheless, the scores could possibly be upgraded if amenities are in a position to stay open and earnings recuperate such that constructive free money circulation and reinvestment flexibility is totally restored, and debt-to-EBITDA is sustained under 5.25x.
The principal methodology used on this score was Gaming Methodology revealed in October 2020 and obtainable at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1244702. Alternatively, please see the Ranking Methodologies web page on www.moodys.com for a replica of this system.
Boyd Gaming Company owns and operates 29 gaming properties in ten states: Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio, and Pennsylvania. Income for the final twelve-month interval ended September 30, 2020 was roughly $2.4 billion.
Please see www.moodys.com for any updates on modifications to the lead score analyst and to the Moody’s authorized entity that has issued the score.
This publication doesn’t announce a credit standing motion. For any credit score scores referenced on this publication, please see the scores tab on the issuer/entity web page on www.moodys.com for probably the most up to date credit standing motion info and score historical past.
Adam McLaren Vice President - Senior Analyst Company Finance Group Moody's Traders Service, Inc. 250 Greenwich Avenue New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Consumer Service: 1 212 553 1653 John E. Puchalla, CFA Affiliate Managing Director Company Finance Group JOURNALISTS: 1 212 553 0376 Consumer Service: 1 212 553 1653 Releasing Workplace: Moody's Traders Service, Inc. 250 Greenwich Avenue New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Consumer Service: 1 212 553 1653
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