S&P cuts Mashantucket (Western) loan

S&P said it cut the Mashantucket (Western) Pequot Tribe’s term loan to D from CCC- after the tribe extended the maturity to Feb. 16, 2025, from Feb. 16, 2022.

Even though no legal default occurred, the agency said it considers the extension equivalent to default because lenders are getting less than promised without adequate offsetting compensation in fees or increased interest.

“We view this action as distressed and tantamount to a default–rather than opportunistic–because, apart from this extension, the tribe would have faced the real possibility of a conventional default given its highly leveraged capital structure and insufficient cash flow to repay the term loan at its maturity. Furthermore, we believe the tribe would likely have been unable to access the capital markets to refinance its term loan as it is currently unable to make full and timely debt service payments to its junior debtholders,” S&P said in a press release.

S&P said it the tribe’s issuer rating remains SD, but it plans to raise the loan’s back into the CCC category as soon as practicable.

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