Fitch downgrades Caesars

Fitch Ratings said it downgraded the issuer default rating of Caesars Entertainment Operating Co. to C from CC, along with its credit facility to CCC with recovery rating of RR1 from CCC+ with a recovery rating of RR1 and its first-lien notes to CCC- with recovery rating of RR2 from CCC with recovery rating of RR2.

The company’s second-lien and unsecured notes were affirmed at C with a recovery rating of RR6.

Fitch also said it affirmed the long-term issuer default rating of Caesars Entertainment Corp. at CC, along with Caesars Entertainment Resort Properties, LLC’s issuer default rating at B-, senior secured first-lien credit facility at B+ with recovery rating of RR2, first-lien notes at B+ with recovery rating of RR2 and second-lien notes at CCC with recovery rating of RR6.

The agency also affirmed Caesars Growth Properties Holdings, LLC’s issuer default rating at B-, senior secured first-lien credit facility at BB- with a recovery rating of RR1 and second-lien notes at B- with recovery rating of RR4.

Corner Investment PropCo, LLC’s long-term issuer default rating was affirmed at CCC, along with its senior secured credit facility at B- with recovery rating of RR2.

The long-term issuer default rating of Chester Downs and Marina LLC (and Chester Downs Finance Corp. as co-issuer) also was affirmed at CCC and its senior secured notes were affirmed at CCC+ with recovery rating of RR3.

The downgrade reflects Caesars Entertainment’s missed $223 million interest payment to the holders of the 10% second-lien notes due Dec. 15, Fitch said.

The company has a 30-day grace period before the missed payment is considered a default per the 10% notes’ indentures, the agency said.

There is $4.5 billion of the 10% notes outstanding and Caesars Entertainment had about $1.3 billion of cash net of estimated cage cash as of Sept. 30, Fitch said.

If the missed interest payment becomes a default, Caesars Entertainment will default on its senior secured credit facility credit agreement with the remaining debt in the capital structure defaulting only if the 10% noteholders accelerate, the agency said.

Regardless of whether the second-lien interest payment is made, Fitch said it believes that a default of some sort is inevitable as the company disclosed in its third-quarter financial report that it will run out of liquidity by the fourth quarter of 2015.

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