{"id":107919,"date":"2019-06-27T10:58:42","date_gmt":"2019-06-27T17:58:42","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=107919"},"modified":"2019-06-27T11:24:55","modified_gmt":"2019-06-27T18:24:55","slug":"eldorado-credit-rating-could-be-lowered-after-caesars-deal","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/","title":{"rendered":"Moody’s Considering Downgrading Eldorado Resorts Credit Rating in Wake of $17.3 Billion Caesars Entertainment Deal"},"content":{"rendered":"

Eldorado Resorts, Inc.\u2019s (NASDAQ:ERI) $17.3 billion offer to acquire Caesars Entertainment Corp. (NASDAQ:CZR) could result in the regional gaming company’s credit ratings being lowered.<\/p>\n

\"\"
Eldorado CEO Tom Reeg at at hearing in New Jersey. His company’s credit rating could be lowered as it buys Caesars. (Image: Press of Atlantic City)<\/figcaption><\/figure>\n

In a note out Wednesday, Moody’s Investors Service said it is placing Eldorado’s ratings on review for possible downgrade following news of the deal to purchase Caesars.<\/p>\n

Eldorado is paying $8.5 billion in cash and stock to acquire the operator of Caesars Palace, Bally’s and Paris on the Las Vegas Strip, but that figure jumps to $17.3 billion when including $8.8 billion in Caesars debt the acquiring company is inheriting.<\/strong> Eldorado, which owns and operates 26 gaming properties in 12 states, had long-term debt of $3.06 billion at the end of the first quarter.<\/p>\n

Looked at differently, Eldorado had a market capitalization of about $4 billion prior to Monday’s announcement of the deal for Caesars, but the company will see its debt burden rise to nearly triple that amount with this transaction.<\/p>\n

The deal is expected to close in the first half of 2020 with Eldorado investors owning 51 percent of the combined company, but the Caesars name will be retained for the new corporate entity.<\/p>\n

It Could Be Higher<\/b><\/h2>\n

In separate transactions announced in the past 10 days, Eldorado announced the sale of six casinos, moves believed to be aimed at raising cash to finance the Caesars buy. Those sales include three Harrah’s venues to VICI Properties Inc. (NYSE:VICI) for $3.2 billion, which was revealed Monday<\/a>.<\/p>\n

All told, the six sold casinos are expected to bring in almost $3.6 billion for Eldorado, but both that company and Caesars recently said they will be tapping credit markets for additional funds for their marriage.<\/p>\n

The financing plan includes a debt raise at both ERI and the acquired CEC entity as well, a situation that could result in the assignment of two separate corporate family ratings,\u201d said Moody’s. \u201cIn addition, the review will focus on ERI’s ability to achieve the planned $500 million of expense synergies.\u201d<\/p><\/blockquote>\n

The agency currently has a B1 rating on Eldorado debt, the equivalent of high-yield or junk bond status. Debt obligations with one of the three \u201cB\u201d ratings from Moody’s \u201care considered speculative and are subject to high credit risk.\u201d<\/p>\n

Better Find Those Synergies<\/b><\/h2>\n

Prior to the offer being formally announced, it was widely believed that Eldorado would only pursue Caesars if the acquiring company could find $500 million in cost savings or \u201csynergies.\u201d Some analysts view Eldorado’s management team, led by CEO Thomas Reeg, at among the gaming industry’s best when it comes to finding ways to pare expenses<\/a>.<\/p>\n

\n

Analysts and investors will be looking for the company to live up to that reputation because, as Moody’s points out, Eldorado’s leverage ratio has been increasing, particularly following the acquisition of the Tropicana in Atlantic City, New Jersey<\/a>.<\/span><\/p>\n<\/div>\n

\u201cPrior to the announcement of the CEC acquisition, Moody’s expectation for ERI’s debt EBITDA was that the company would be able to lower its debt\/EBITDA to between 5.3 times and 5.5 times,\u201d said Moody’s. \u201cHowever, ERI’s merger with CEC raises concerns that leverage will rise above the downward trigger on a Moody’s pro forma and projected basis.\u201d<\/p>\n

The research firm estimates Eldorado’s leverage ratio to rise to 7.2 times in the wake of the Caesars deal.<\/p>\n

\n

Why Corporate Credit Ratings Matter<\/b><\/span><\/h2>\n

Think of this issue in terms of your personal FICO score. The lower it is, the higher the interest will be lenders charge to extend to credit to you.<\/span><\/p>\n

It is very much the same in the corporate bond market. A highly rated company, say Apple or Microsoft, can issue debt at favorable rates, meaning lower yields for investors. Conversely, when a company with a junk rating, like Eldorado, sells bonds, it has to offer higher interest rates to compel investors to take on the added risk.<\/span><\/p>\n

The further down the ratings spectrum a company is, the higher interest rates it has to sell debt at if and when it decides to do so.<\/span><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Eldorado Resorts, Inc.\u2019s (NASDAQ:ERI) $17.3 billion offer to acquire Caesars Entertainment Corp. (NASDAQ:CZR) could result in the regional gaming company’s credit ratings being lowered. In a note out Wednesday, Moody’s Investors Service said it is placing Eldorado’s ratings on review for possible downgrade following news of the deal to purchase Caesars. Eldorado is paying $8.5 […]<\/p>\n","protected":false},"author":46,"featured_media":107922,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,33810],"tags":[],"acf":[],"yoast_head":"\nMoody's Considering Downgrading Eldorado Resorts Credit Rating in Wake of $17.3 Billion Caesars Entertainment Deal - Casino.org Eldorado Credit Rating Could be Lowered After Caesars Deal<\/title>\n<meta name=\"description\" content=\"Eldorado Resorts, Inc.\u2019s (NASDAQ:ERI) $17.3 billion offer to acquire Caesars Entertainment Corp. (NASDAQ:CZR) could result in the regional gaming Eldorado Resorts could see its bond rating lowered following its plan to buy Caesars Entertainment for $17.3 billion.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Moody's Considering Downgrading Eldorado Resorts Credit Rating in Wake of $17.3 Billion Caesars Entertainment Deal - Casino.org Eldorado Credit Rating Could be Lowered After Caesars Deal\" \/>\n<meta property=\"og:description\" content=\"Eldorado Resorts, Inc.\u2019s (NASDAQ:ERI) $17.3 billion offer to acquire Caesars Entertainment Corp. (NASDAQ:CZR) could result in the regional gaming Eldorado Resorts could see its bond rating lowered following its plan to buy Caesars Entertainment for $17.3 billion.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2019-06-27T17:58:42+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2019-06-27T18:24:55+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2019\/06\/ReegNJ.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"900\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/\",\"url\":\"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/\",\"name\":\"Moody's Considering Downgrading Eldorado Resorts Credit Rating in Wake of $17.3 Billion Caesars Entertainment Deal - Casino.org Eldorado Credit Rating Could be Lowered After Caesars Deal\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2019\/06\/ReegNJ.jpg\",\"datePublished\":\"2019-06-27T17:58:42+00:00\",\"dateModified\":\"2019-06-27T18:24:55+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Eldorado Resorts, Inc.\u2019s (NASDAQ:ERI) $17.3 billion offer to acquire Caesars Entertainment Corp. (NASDAQ:CZR) could result in the regional gaming Eldorado Resorts could see its bond rating lowered following its plan to buy Caesars Entertainment for $17.3 billion.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2019\/06\/ReegNJ.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2019\/06\/ReegNJ.jpg\",\"width\":1200,\"height\":900,\"caption\":\"Eldorado CEO Tom Reeg at at hearing in New Jersey. His company's credit rating could be lowered as it buys Caesars. (Image: Press of Atlantic City)\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"News\",\"item\":\"https:\/\/www.casino.org\/news\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Financial\",\"item\":\"https:\/\/www.casino.org\/news\/financial\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Moody’s Considering Downgrading Eldorado Resorts Credit Rating in Wake of $17.3 Billion Caesars Entertainment Deal\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.casino.org\/news\/#website\",\"url\":\"https:\/\/www.casino.org\/news\/\",\"name\":\"Casino.org\",\"description\":\"Latest Casino and Gaming News\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.casino.org\/news\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\",\"name\":\"Todd Shriber\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/03\/cropped-11-96x96.png\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/03\/cropped-11-96x96.png\",\"caption\":\"Todd Shriber\"},\"description\":\"Todd Shriber is a senior news reporter covering gaming financials, casino business, stocks, and mergers and acquisitions for Casino.org. Todd got his start in financial markets as a reporter with Bloomberg News. Later, he became a trader at a Southern California-based long\/short hedge fund, where he specialized in the trading sector and international ETFs leading up to and during the financial crisis. He joined Casino.org in 2019. Currently, Todd analyzes, researches, and writes on ETFs for various web-based publications and financial services firms. Shriber has been featured and quoted in Barron's, CNBC.com, and The Wall Street Journal. His work can also be found on Benzinga, ETF Daily News, ETF Trends, MarketWatch, Fox Business, and Nasdaq.com. He currently resides in Las Vegas, where he enjoys golf and taking his black lab to the dog park. He's also an avid sports fan and likes to wager on college football and the NBA. You can also find him at the three-card poker and roulette table, even though he knows better. Contact Todd at todd.shriber@casino.org.\",\"sameAs\":[\"https:\/\/muckrack.com\/todd-shriber\",\"https:\/\/www.linkedin.com\/in\/toddshriber\/\",\"https:\/\/x.com\/etfgodfather\"],\"url\":\"https:\/\/www.casino.org\/news\/author\/todd-shriber\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Moody's Considering Downgrading Eldorado Resorts Credit Rating in Wake of $17.3 Billion Caesars Entertainment Deal - Casino.org Eldorado Credit Rating Could be Lowered After Caesars Deal","description":"Eldorado Resorts, Inc.\u2019s (NASDAQ:ERI) $17.3 billion offer to acquire Caesars Entertainment Corp. (NASDAQ:CZR) could result in the regional gaming Eldorado Resorts could see its bond rating lowered following its plan to buy Caesars Entertainment for $17.3 billion.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/","og_locale":"en_US","og_type":"article","og_title":"Moody's Considering Downgrading Eldorado Resorts Credit Rating in Wake of $17.3 Billion Caesars Entertainment Deal - Casino.org Eldorado Credit Rating Could be Lowered After Caesars Deal","og_description":"Eldorado Resorts, Inc.\u2019s (NASDAQ:ERI) $17.3 billion offer to acquire Caesars Entertainment Corp. (NASDAQ:CZR) could result in the regional gaming Eldorado Resorts could see its bond rating lowered following its plan to buy Caesars Entertainment for $17.3 billion.","og_url":"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/","og_site_name":"Casino.org","article_publisher":"https:\/\/www.facebook.com\/Casino.OrgNews","article_published_time":"2019-06-27T17:58:42+00:00","article_modified_time":"2019-06-27T18:24:55+00:00","og_image":[{"width":1200,"height":900,"url":"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2019\/06\/ReegNJ.jpg","type":"image\/jpeg"}],"author":"Todd Shriber","twitter_card":"summary_large_image","twitter_creator":"@etfgodfather","twitter_site":"@Casino_Org","twitter_misc":{"Written by":"Todd Shriber","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/","url":"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/","name":"Moody's Considering Downgrading Eldorado Resorts Credit Rating in Wake of $17.3 Billion Caesars Entertainment Deal - Casino.org Eldorado Credit Rating Could be Lowered After Caesars Deal","isPartOf":{"@id":"https:\/\/www.casino.org\/news\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/#primaryimage"},"image":{"@id":"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/#primaryimage"},"thumbnailUrl":"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2019\/06\/ReegNJ.jpg","datePublished":"2019-06-27T17:58:42+00:00","dateModified":"2019-06-27T18:24:55+00:00","author":{"@id":"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85"},"description":"Eldorado Resorts, Inc.\u2019s (NASDAQ:ERI) $17.3 billion offer to acquire Caesars Entertainment Corp. (NASDAQ:CZR) could result in the regional gaming Eldorado Resorts could see its bond rating lowered following its plan to buy Caesars Entertainment for $17.3 billion.","breadcrumb":{"@id":"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/#primaryimage","url":"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2019\/06\/ReegNJ.jpg","contentUrl":"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2019\/06\/ReegNJ.jpg","width":1200,"height":900,"caption":"Eldorado CEO Tom Reeg at at hearing in New Jersey. His company's credit rating could be lowered as it buys Caesars. (Image: Press of Atlantic City)"},{"@type":"BreadcrumbList","@id":"https:\/\/www.casino.org\/news\/eldorado-credit-rating-could-be-lowered-after-caesars-deal\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"News","item":"https:\/\/www.casino.org\/news\/"},{"@type":"ListItem","position":2,"name":"Financial","item":"https:\/\/www.casino.org\/news\/financial\/"},{"@type":"ListItem","position":3,"name":"Moody’s Considering Downgrading Eldorado Resorts Credit Rating in Wake of $17.3 Billion Caesars Entertainment Deal"}]},{"@type":"WebSite","@id":"https:\/\/www.casino.org\/news\/#website","url":"https:\/\/www.casino.org\/news\/","name":"Casino.org","description":"Latest Casino and Gaming News","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.casino.org\/news\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85","name":"Todd Shriber","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.casino.org\/news\/#\/schema\/person\/image\/","url":"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/03\/cropped-11-96x96.png","contentUrl":"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/03\/cropped-11-96x96.png","caption":"Todd Shriber"},"description":"Todd Shriber is a senior news reporter covering gaming financials, casino business, stocks, and mergers and acquisitions for Casino.org. Todd got his start in financial markets as a reporter with Bloomberg News. Later, he became a trader at a Southern California-based long\/short hedge fund, where he specialized in the trading sector and international ETFs leading up to and during the financial crisis. He joined Casino.org in 2019. Currently, Todd analyzes, researches, and writes on ETFs for various web-based publications and financial services firms. Shriber has been featured and quoted in Barron's, CNBC.com, and The Wall Street Journal. His work can also be found on Benzinga, ETF Daily News, ETF Trends, MarketWatch, Fox Business, and Nasdaq.com. He currently resides in Las Vegas, where he enjoys golf and taking his black lab to the dog park. He's also an avid sports fan and likes to wager on college football and the NBA. You can also find him at the three-card poker and roulette table, even though he knows better. Contact Todd at todd.shriber@casino.org.","sameAs":["https:\/\/muckrack.com\/todd-shriber","https:\/\/www.linkedin.com\/in\/toddshriber\/","https:\/\/x.com\/etfgodfather"],"url":"https:\/\/www.casino.org\/news\/author\/todd-shriber\/"}]}},"_links":{"self":[{"href":"https:\/\/www.casino.org\/news\/wp-json\/wp\/v2\/posts\/107919"}],"collection":[{"href":"https:\/\/www.casino.org\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.casino.org\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.casino.org\/news\/wp-json\/wp\/v2\/users\/46"}],"replies":[{"embeddable":true,"href":"https:\/\/www.casino.org\/news\/wp-json\/wp\/v2\/comments?post=107919"}],"version-history":[{"count":0,"href":"https:\/\/www.casino.org\/news\/wp-json\/wp\/v2\/posts\/107919\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.casino.org\/news\/wp-json\/wp\/v2\/media\/107922"}],"wp:attachment":[{"href":"https:\/\/www.casino.org\/news\/wp-json\/wp\/v2\/media?parent=107919"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.casino.org\/news\/wp-json\/wp\/v2\/categories?post=107919"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.casino.org\/news\/wp-json\/wp\/v2\/tags?post=107919"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}