Moody's upgraded MGMResorts International's corporate family rating to Ba3 from B2, witha stable ratings outlook.
The rating agency also upgraded the company's probability ofdefault rating to Ba3-PD from B2-PD and its unsecured ratings to B1 (LGD4) fromB3 (LGD4). MGM's speculative-grade liquidity rating was raised to SGL-1 from SGL-3,reflecting the elimination of near-term debt maturities, the company's ability tomeet its 2017 bond maturities from cash flow and cash on hand, and good covenantcushion.
According to Moody's, the two-notch upgrade reflects the company'ssuccessful creation ofMGM Growth Partners LLC and the announced distribution of $540 million from CityCenter.
Moody's noted that MGM Growth's creation increases financialflexibility and resulted in a significant reduction in refinancing risk, while thedistribution increases liquidity to support future repayment of MGM's 2017 bondmaturities of $743 million.
The upgrade also takes into account Moody's expectation thatconsolidated gross debt-to-EBITDA will decline from 6.5x at 2015-end to about 6.0xat 2016-end and to 4.8x at 2017-end.
Meanwhile, the rating agency has also withdrawn ratings on MGM'ssenior secured bank and revolving credit facilities that were repaid.
The stable ratings outlook reflects Moody's view that the company'sconsolidated operating results will improve over the next year due to higher domesticearnings; contribution from new projects opening in Maryland and Macau, offset bycontinued declines in existing Macau operations; and benefits of the company's profitgrowth plan.