MGM Resorts seeking to raise $1 billion in new debt

LAS VEGAS -- MGM Resorts International said Thursday it hopes to raise $1 billion in new debt to help pay for some of the development costs surrounding the company’s hotel-casino projects in Massachusetts and Maryland.

The company, which already carries $11.7 billion in long-term debt, said the new debt would come due in 2023.

In a statement, MGM Resorts said proceeds from the debt sale would also be used to repay $1.3 billion of the company’s debt that is due next year.

Two high yield bond ratings services, Moody’s and Fitch, had positive views of the MGM Resorts transaction.

The company is developing the $800 million MGM Resorts International Springfield in Massachusetts and the $1.2 billion MGM National Harbor in Maryland. Also, the company is building a $2.9 billion hotel-casino on the Cotai Strip region of Macau.

“Overall, Fitch views the issuance positively as it largely addresses MGM’s liquidity needs through the development phase of the company’s projects,” Fitch gaming analyst Alex Bumazhny said in a statement.

Moody’s analyst Peggy Holloway said the new debt offering by MGM Resorts “could substantially improve the company’s near-term debt maturity profile” because it would help eliminate the 2015 obligations.

MGM Resorts did not comment beyond a brief statement announcing the debt offering.

Bumazhny said MGM Resorts has the largest growth pipeline in the gaming industry. Fitch has a positive view on the return-on-investment potential for the Maryland casino, which is less that eight miles from Washington, D.C.

Fitch, however, is less optimistic on the Springfield development.

“While funding the U.S. projects on its balance sheet increases the short-term liquidity risk, the projects will enhance MGM’s credit profile longer-term by diversifying the company away from the Las Vegas Strip, particularly the one in Maryland.” Bumazhny said.