LV company's debt downgraded by rating agency

Rating agency Fitch IBCA downgraded two corporate credit ratings for Boyd Gaming Corp. of Las Vegas on Friday, citing weaker than expected operating results.

Fitch gaming analyst Steven Altman reduced his rating on $200 million in senior notes from "BB" to "BB-minus," and its rating on $250 million in senior subordinated notes from "B-plus" to "B." Fitch also assigned a "BB" rating on Boyd's $700 million senior secured bank credit facility, due 2003.

The outlook for the company was changed from negative to stable.

Altman cited weak operating results, particularly at Sam's Town on the Boulder Strip in Las Vegas and its sister property in Tunica, Miss. The report cited "a lack of visible anticipated improvement from these properties given the highly competitive conditions that exist in both markets."

Debt levels will also remain at high levels over the next several years, Altman noted. Much of this additional debt is expected to be incurred in connection with the construction of the $1 billion Borgata, a joint venture with MGM MIRAGE in Atlantic City set for completion in 2003.

All ratings below "BBB" are considered "speculative," more commonly known as junk bond ratings. Lower ratings can make it more difficult for a company to take on debt, and often result in higher interest rates.

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