Moody's: American Casino outlook negative

Moody's Investors Service said it changed the outlook for American Casino & Entertainment Properties, LLC to negative from stable.

The company's B3 corporate family and probability-of-default ratings, B3 (LGD3, 47% from LGD4, 50%) senior secured note rating and SGL2 speculative grade liquidity rating were affirmed.

The change in outlook reflects worse-than-expected operating results through the second quarter of 2010 that has caused credit metrics to deteriorate, according to the agency.

Additionally, the operating environment on the Las Vegas Strip and in the Las Vegas locals market remains under pressure due to capacity additions and lower spending on gaming by consumers, the agency noted.

The B3 corporate family rating reflects the company's small size, its high leverage and weak interest coverage, Moody's said.

It also reflects the company's revenue concentration in the depressed gaming markets in and around Las Vegas and capacity expansion on the Las Vegas Strip that has depressed room rates and hampered operators' ability to increase rates, the agency said.

Positive rating considerations include the company's good liquidity and expectation that the company can generate sufficient earnings to support interest and maintenance capital spending, Moody's noted.

Ratings could be upgraded if the company can improve and sustain gross debt-to-EBITDA ratio below 3.5 times, the agency said.

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