Weekly Downgrade Wrap-up
As usual, we have a week's worth of ratings actions on LBO-backed companies from ratings agencies Standard & Poor's and Moody's Investor Services. It's the second light week in a row--last week S&P and Moody's only took a ratings action on one company. This week we have four. Company Station Casinos Inc. Sponsor: Colony Capital LLC Action: S&P lowered its issue-level rating on the business to ‘D' after it filed for Chapter 11 bankruptcy protection and revised its recovery rating on the company's senior unsecured notes to '5' from '4'. Moody's downgraded the company's probability of default rating to D from Ca and downgraded the ratings on the company's senior secured revolver and term loan were downgraded to Caa3 from B3. Highlights: From S&P: "This rating action follows our Feb. 4, 2009, research report in which we lowered our corporate credit rating on Station and our issue-level rating on its 6.5% senior subordinated notes to 'D' following th" Given the severe challenges faced by the gaming industry and by Station in particular, Moody's used a fundamental distressed EBITDA valuation (6 times multiple) to estimate loss-give-default rather than the 50% mean family recovery rate."
