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Banks Bet on Tribal Casinos

31 March 2004

NEW YORK – As reported by the Financial Times: "The native American casino business is minting money, luring gamblers in all parts of the country. Increasingly, Wall Street bankers are placing bets on the fast-growing industry through the bond markets that are funding the boom.

"Last year, revenues from such casinos reached about one-third of total gaming revenues, excluding lotteries, and are set to rise to more than 40 per cent by 2006, according to Merrill Lynch.

"…Now Wall Street is getting in on the act. The scale of the projects needing funding has prompted a corresponding rise in the number and size of municipal and corporate bond issues in the fledgling sector.

"…The bonds are not for the faint-hearted. Kurt van Kuller, analyst at Merrill Lynch, warns that the proposals that made it to the market were the best of the financial opportunities in the sector.

"…S&P currently rates eight native American issuers and expects that number to continue to rise.

"…Unlike many classes of bonds, which tend to settle into a yield range as the sector matures, each native American issue still has to be considered on its individual merits, bankers warn…"

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