International credit debt watcher Moody’s Investor Service has upgraded the Seminole Tribe of Florida’s existing term debt, affirming the positive prospects for the tribe’s casino business.
South Florida Business Journal reported that Moody’s assigned a positive Baa2 rating to the Tribe’s proposed $2.4 billion credit facility, saying that the tribe “reflects its dominant market position in the Florida gaming market and the company’s strong financial profile.”
Obligations rated Baa2 are subject to moderate credit risk. They are considered medium grade and as such may possess certain speculative characteristics.
It was reported that proceeds from the tribe’s credit facility will be used to repay the Tribe’s outstanding term loans and fund expansions at its Tampa and Hollywood casinos in Florida.
“The upgrade of the Tribe’s ratings reflect Moody’s expectation of continued exceptionally strong credit metrics along with further and substantial investment in the Tribe’s two largest casinos that will help the Tribe maintain its dominant market position over the long-term,” Keith Foley, a Moody’s senior vice president, said. “Even with the significant planned capital investment, the Tribe will be able to maintain very low leverage, at less than 2.0 times.”
Moody’s also considers as credit positive the Tribe’s decision to continue to make revenue payments to the state despite a court ruling that allows the Tribe to withhold revenue share payments under the existing compact, which expires in 2030.
The ratings agency said that key concerns include “the Tribe’s gaming concentration in one state and significant dividend obligation.”
The Seminole Tribe welcomed the ratings upgrade, saying the improved ratings will save millions of dollars by helping to keep borrowing costs lower.
“They will help Seminole Gaming to continue as one of the world’s most profitable gaming enterprises,” Jim Allen, CEO of the Tribe’s Seminole Gaming unit.
Tribe chairman Marcellus Osceola Jr. pointed out that the ratings upgrade means that their “tribal members, employees, customers, vendor partners and community residents can count on many good years ahead.”