Fitch: Caesars on watch positive

Fitch Ratings affirmed the BBB- senior secured and BB+ debt ratings of Harrah's Entertainment and placed the BB+ senior unsecured debt and BB- senior subordinated debt long-term ratings of Caesars Entertainment on Rating Watch Positive following the announcement that Harrah's has reached an agreement to purchase Caesars for $9.44 billion.

From a credit perspective, Fitch said the transaction can be adequately absorbed within Harrah's existing rating category given the significant level of equity in the transaction and steady free cash flow produced by both entities.

On a pro forma basis, Fitch estimates the combined entity would produce leverage of 4.5x to 5.0x at closing, depending on the level of asset sales. Following the merger, leverage would be expected to fall below 4.0x within 12 to 18 months of closing.

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