Moody's rates Fontainebleau Las Vegas loans B1

Moody's Investors Service said it assigned B2 corporate family and probability-of-default ratings and a loss-given-default assessment of LGD4 (50%) to Fontainebleau Las Vegas Holdings, LLC and B1 (LGD3, 36%) ratings to Fontainebleau Las Vegas LLC's $1 billion 5-year secured and guaranteed revolving credit facility and $850 million seven-year secured and guaranteed delayed draw term loan.

The outlook is stable.

A minimum cash contribution of $430 million from ultimate parent company Fontainebleau Resorts, LLC, $850 million of secured delayed-draw term loan, $675 million of second mortgage notes and drawings from the $1 billion secured revolving credit facility will be used to construct the Fontainebleau Las Vegas resort on the north end of the Las Vegas Strip. The project budget totals $2.5 billion, including the retail component that is being financed separately.

The agency said the ratings are supported by the project's size, location in a low regulatory risk jurisdiction and successful development history of the principal sponsor.

These positives are offset by the company's above-average leverage, low interest coverage and construction risk, Moody's said. The agency estimated that the debt-to-EBITDA ratio will be 6x in 2010.

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