S&P rates Revel B-, loan B

Standard & Poor's said it assigned Revel AC Inc. a corporate credit rating of B- and its $850 million first-lien term loan due 2017 a B issue-level rating with a 2 recovery rating, indicating the expectation of substantial (70% to 90%) recovery for lenders in the event of a payment default.

The outlook is negative.

The company will use proceeds from the debt issuance to fund $1 billion of remaining development and construction costs for Revel AC, establish an interest reserve account to fund first-lien debt service during the remaining construction period and the first six months following opening, and to fund transaction fees and expenses.

The ratings assignment follows the recent closing of the company's construction financing, the agency said.

The ratings reflect the belief that the company will be challenged to ramp up cash flow generation to a level sufficient to satisfy debt service obligations under the capital structure, as well as the expectation for relatively weak credit measures, S&P said.

The rating also reflects Revel's reliance on a single property for cash flow generation in a challenged gaming market and a business model that relies heavily on spurring nascent demand from a distinct customer base, the agency added.

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