Saracen Development, a wholly-owned company of the Quapaw Nation, received credit rating upgrades from Moody’s and S&P Global in a vote of confidence for the company’s business in the Arkansas gaming market.
Saracen owns Saracen Casino Resort in Pine Bluff, Arkansas, a 45 minute drive from Little Rock. Saracen opened the $350m property in October 2020. It includes 2,300 slot machines, 50 table games, a sportsbook and several food and beverage options.
Moody’s upgraded Saracen’s Corporate Family Rating and $285 million senior secured notes due 2025 to B3 from Caa1 and its Probability of Default Rating to B3-PD from Caa1-PD. The rating outlook is positive.
Moody’s expects that Saracen will exceed its initial $60m first-year EBITDA expectation. Moody’s estimates that Saracen will generate at least $20m of free cash flow in its first full year of operations and maintain close to $25m of unrestricted cash on its balance sheet.
S&P raised its issuer-credit rating on Saracen to ‘B-’ from ‘CCC.’ S&P also raised the issue-level rating on the company’s senior secured notes by two notches to ‘B-.’ The rating outlook is positive.
S&P also expects Saracen to generate faster-than-expected EBITDA and cash-flow to a level that covers charges related to the casino’s delayed opening and the initial operating restrictions due to Covid-19.
“A double credit rating upgrade on the same day by the world’s two largest credit rating agencies is impressive on its own merits. But twin upgrades for a tribal entity is entirely unprecedented,” said Quapaw Nation Business Committee Secretary-Treasurer Guy Barker. “The factors leading to the increased rating for Saracen from both Moody’s and S&P indicate increased confidence in both our financial performance and outlook from the biggest and most respected financial institutions in the country. This rating increase is external validation of our dedicated efforts to eliminate debt and is confirmation of our increased ability to do so.”
Quapaw Nation Business Committee Chairman Joseph Tali Byrd added, “Moody’s and S&P based their decisions on factors like our handling of the COVID-19 crisis, the financial solvency of our business and our superiority in the Arkansas gaming market. This rating upgrade and the confidence it represents serves Quapaw Nation citizens well, along with the citizens of Pine Bluff and Jefferson County. This is fantastic news as we continue to strengthen our partnerships within the community.”
