MGM MIRAGE bonds grow

September 9

MGM Mirage bonds, the third biggest U.S. casino company, are said to be rising on speculation that an influx of visitors to Las Vegas will ease the burden of meeting any additional debt payments taken on in connection with its planned acquisition of Mandalay Resort Group.

MGM Mirage's 6 percent notes maturing in 2009 rose approximately  5 cents to 102 cents on the dollar since the company, based in Las Vegas made a bid for Mandalay over three months ago, according to Merrill Lynch & Co. In that time, company debt with MGM Mirage's BB credit ratings rose 2.6 cents to 105.7 cents on average.

The amount of travelers going to Las Vegas increased 6.5 percent in the first six months of 2004 from a year earlier, according to the Las Vegas Convention and Visitors Authority. MGM MIRAGE, owner of the Bellagio, The Mirage, and Treasure Island casinos, is buying Mandalay for about $4.8 billion to add properties including the Mandalay Bay and Circus Circus.

It is largely thought that casinos will continue to do well in type of growing economy.

MGM Mirage's second-quarter earnings more than doubled to $105.8 million as more travelers visited their casinos. It sold $400 million of five year notes Wednesday as an add-on to an existing $600 million issue last September. Proceeds are set aside to pay bank debt. The new notes yield 2.28 percentage points more than benchmark Treasuries, less than the average spread of 2.42 percentage points for BB debt.

It is also noted that MGM Mirage bonds weakened after the company first bid for Mandalay on June 4 on concern the acquisition would be largely debt financed. The securities have since gained as some investors considered the scenario of a stock funded buyout.

Also, Moody's Investors Service said last month it may cut MGM Mirage's credit rating on concern its planned purchase of Mandalay will be financed with new debt.