MGM Resorts International raises $1 billion in unsecured 10-year bonds

MGM Resorts International issued $1 billion in unsecured 10-year bonds Thursday at the lowest interest rate the company has seen since 2007. The transactions marked the first time since the recession the company did not have to use its casinos as collateral.

A source said the issuance was the largest unsecured bond offering accomplished in the company's history. In a statement, the company said the notes due in 2022 were priced at 7.75 percent.

"MGM's proposed note offering is another positive step towards refinancing its considerable debt maturities in the next two years," Moody's Investors Service gaming analyst Peggy Holloway said in a statement.

The financing will allow MGM Resorts to extend debt maturities coming due in 2014 out another 10 years, improving the company's balance sheet and signaling the investment community that Las Vegas is on path toward recovery following the recession.

Another ratings service, Standard & Poor's, revised its outlook on MGM Resorts to "positive," citing growth trends in Las Vegas and reduced refinancing risk.

MGM Resorts Chief Financial Officer Dan D'Arrigo said the bond deal was first time since 2006 that he's been able to secure 10-year bonds for the company. Past bond deals have been for seven years or fewer and have been secured by Bellagio, MGM Grand and other of the company's 10 Strip resorts.

"What this tells the investment community is that the Las Vegas recovery is well under way," D'Arrigo said. "MGM Resorts is predominately Las Vegas and this deal helps us repay our long-term debt."

MGM Resorts will still have a little more than $12 billion in long-term debt, but maturity dates have been extended several years.

The company originally planned to raise $750 million in the bond offering, but raised the figure to $1 billion because of high investor demand.

Before the recession, bond offerings such as Thursday's might have been used to fund new projects and other developments. Instead, the company hopes to have a much stronger balance sheet.

D'Arrigo said MGM Resorts' proposed hotel-casino project on Macau's Cotai Strip, which is still awaiting approval from the Chinese special administrative region's government, would be self funded through cash flow from MGM China. The company's subsidiary, which is traded on the Hong Kong Stock Exchange, operates the MGM Grand Macau.

Shares of MGM Resorts closed at $14.71 Thursday on the New York Stock Exchange, up 59 cents, or 4.18 percent.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.
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