S&P ups Eldorado Resorts notes to B

S&P said it raised its issue-level rating on Eldorado Resorts Inc.'s senior unsecured notes to B from B- and revised the recovery rating to 5 from 6. The 5 recovery rating indicates an expectation for modest (10% to 30%; rounded estimate: 10%) recovery for lenders in the event of a payment default.

The upgrade follows the company's announcement that it intends to repay a portion of its term loan ($1.45 billion outstanding as of June 30, 2017) with proceeds from a $350 million add-on to its existing $375 million 6% senior unsecured notes due 2025.

“Since the level of secured debt outstanding at our hypothetical default will be lower than under our previous analysis, there is a greater level of enterprise value available to cover unsecured claims. Although the level of unsecured claims will be increasing, the additional enterprise value is sufficient to improve recovery prospects for unsecured lenders,” S&P said in a news release.

All other ratings, including the B+ corporate credit rating, are unchanged.

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