Despite concerns over casinos in Las Vegas after the downturn in air travel following the terrorist attacks, Goldman Sachs and Bank of Nova Scotia's "B" term loan for Venetian Casino Resort's blew out within hours of launch two weeks ago and was five times oversubscribed as Loan Market Week went to press. "Venetian is a high quality casino property and there are strong advanced booking trends related to the company's conference business," noted Moody's Investors Service analyst Keith Foley. Las Vegas is still a very popular destination for conferences, he added. The $375 million bank debt has received a B2 rating from Moody's, which is one notch higher than the senior implied rating. The $850 million in second mortgage notes accompanying the credit have been rated Caa1.
The proceeds from the new credit and the notes will repay existing debt and also fund the Phase 1A project that was put on hold following Sept 11. Moody's believes the project has a good risk/reward profile, and though cash flow results have not returned to pre Sept. 11 levels, improved travel trends combined with cost cutting support the credit. As a single property, if the Venetian ran into trouble it would be unable to sell off pieces in a default scenario. But the expectation is the bank loan would do well, said Foley, explaining the Venetian is right in the middle of Vegas and there is a lot of value in the property. The property is still relatively leveraged though, Foley said. Calls to finance officials at the company were referred to the press office, which did not return calls.