Caesars’ 15% Signals Restructure by 2016

Caesars Entertainment bonds with an average yield of almost 15 percent are indicating the largest U.S. casino owner will have to restructure its $19.9 billion of borrowings by 2016.

While other U.S.-based gaming-company debt yields an average 9.18 percent, according to BAML data, Caesar’s bonds with maturities of more than three years have spreads to peers that show investors are concerned it won’t be able to service longerterm borrowings. Caesars has more than $9 billion of debt due by 2016.

“Given their leverage and interest coverage, we can’t rule out the possibility it will at some point do a debt exchange or need to restructure,” said Peggy Holloway, senior credit officer at Moody’s.

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