Boyd Gaming Selling $900 Million Worth Corporate Debt

Boyd Gaming, an American company based in Nevada, organizes debt sales to $900 million. The company’s latest signing firms can easily access capital amid the pandemic.

Usually, debt sales organized by companies are not considered a good decision neither are they remarkable. Debt Sales by the firm is an everyday activity but when it comes to Boyd’s bond offering, the decision is considered as if the company is trying to sell more papers than before.

The Las Vegas operator planned to sell $750 million worth of bonds. The selling notes in the offer closes on June 8th and have an interest rate of 4.75%. This is 10 basis points below the yield on Markit iBoxx USD Liquid High Yield Index. This is a relevant comparison because, with the store credit rating of B2 on Moody’s Scale, Boyd is a junk-rate issuer.

According to the company’s statement, “The company intends to use a portion of the proceeds from the offerings to finance the redemption of all of its outstanding 6.375% senior notes due 2026.”

“Concurrent with the offering, the company also intends to redeem all of its outstanding six percent senior notes due 2026 using a combination of proceeds from the offering and cash in hand.”

To translate the above statement, Boyd is using newer debts with legitimate lower interest rates. The long maturities pay off higher coupon obligations maturing sooner.

Company’s outlook on Boyd Stock

The Orleans Hotel and Casino operator’s shares are off by 8.58% over the past month, downside after joining other gaming stocks.

However, Boyd’s share shoots up to 43% in the year to date, hence proving it to be one of the best-performing companies in the industry. Analysts provide bullish facts on the Aliante operators based on increasing vibrancy and strength in the regional market.

The regional diversification and involvement in other gaming markets other than Las Vegas prove Boyd’s credit and equality thesis.

Notes of the Moody Investors Services says, “Boyd’s credit ratings also reflect the company’s significant size and geographic diversification. The company is one of the largest regional gaming operators in terms of net revenue and number of operational casino assets.” The research firm has a strong outlook on the operator’s B2 debt grade.

Boyd’s strong liquidity

Boyd is a part of the trend where the gaming industry has made significant and off-the-charts improvements while emerging from the pandemic.

The operator had $519 million in revenue in unrestricted cash and surging free cash flow during the end of the year.

According to Moody, “The stable outlook considers the recovery in the company’s business and margin improvement exhibited in Q3 and Q4 of 2020, and the expectation for continued sequential improvement in 2021. The stable outlook also incorporates the company’s good liquidity and the expectation for leverage to continue to come down from the current levels as the business continues to recover and debt is reduced. ”