S&P: Mohegan Tribal Gaming Authority’s $500 Million Senior Unsecured Notes Rated 'CCC+'
S&P Global Ratings does not assign recovery ratings to Native American debt issues because there are sufficient uncertainties surrounding the exercise of creditor rights against a sovereign nation. These include whether the U. S. Bankruptcy Code would apply, whether a U. S. court would ultimately be the appropriate venues to settle such a matter, and to what extent a creditor would be able to enforce any judgment against the sovereign nation. The notching of our issue-level ratings from our issuer credit rating on a given Native America issuer reflects the relative position of each security in the capital structure, incorporating the amount of higher ranking priority debt in its capital structure.
MTGA's proposed $1.4 billion senior secured credit facility will be the highest ranking debt in the capital structure. Under our forecast, we expect the senior secured credit facility to remain more than 30% of forecasted total assets through 2017. This results in an issue-level rating of 'CCC+' (two notches below the expected issuer credit rating on MTGA following the completion of the proposed transactions) on the unsecured notes.
Our 'B-' issuer credit rating on MTGA remains on CreditWatch with positive implications. We expect to resolve the CreditWatch listing upon the execution of the proposed refinancing transactions and raise our issuer credit rating one notch to 'B' from 'B-' if the refinancing transactions are completed as outlined, reflecting our forecast for discretionary cash flow generation to remain positive, and for EBITDA coverage of interest to remain in the high-1x area over the long run. (For the most recent issuer credit rating rationale, please see "Mohegan Tribal Gaming Authority ‘B-‘ Issuer Credit Rating Placed on CreditWatch Positive; New Ddebt Rated," published Sept. 19, 2016, on RatingsDirect.)