From the Petoskey News-Review (H/T Junior; also Indianz):
Standard & Poor’s — an independent global provider of credit ratings — has reduced the Little Traverse Bay Bands of Odawa Indians’ credit rating twice in one week.
Following the tribe’s Aug. 11 announcement that it was attempting to re-negotiate the payment of its $122 million in senior unsecured notes — which were originally issued in 2006 to support the construction of the Odawa Casino Resort — and would therefore be suspending its $6.3 million in interest payments due Aug. 17 to its holders; Standard & Poor’s issued a statement Aug. 12, that it would immediately reduce the tribe’s credit rating from ‘CCC’ to ‘CC’ with a negative outlook.
According to Standard & Poor’s credit rating definitions, available on their Web site — www.standardandpoors.com— a ‘CCC’ credit rating means that a company is currently vulnerable, and ‘CC’ means the company is highly vulnerable.
In its Aug. 12 release, Standard & Poor’s also stated that once the tribe missed its interest payment on Monday, Aug. 17, that its credit rating would be reduced to ‘D,’ which means the company has failed to pay one or more of its financial obligations, and that the global credit-rating provider believes the tribe will fail to pay all, or substantially all of its obligations as they come due.
In their release regarding the tribe, Standard & Poor’s states, “While the (tribe’s) notes provide for a 30-day grace period, during which interest may be paid to avoid a default, under our criteria, we consider an event of default to have occurred on the payment date unless we are confident that a payment will be made during the grace period.”
Frank Ettawageshik, chairman of the Little Traverse Bay Bands of Odawa Indians, said he is not surprised by Standard & Poor’s reaction to their current negotiations.
“It’s not unexpected that they (lower the tribe’s credit rating) … it’s a normal thing that occurs,” he said. “They do that whenever someone is in the process of negotiations and has suspended a payment.”
Ettawageshik said, even so, he is not pleased that their credit rating has been lowered.
“Clearly, if the economy were in better shape, we would be happier,” he said. “But, we understand that this is part of the process.”
In November of 2008, the News-Review reported that Standard & Poor’s listed the tribe as one of its 181 global companies most vulnerable to default.
When the list was released Oct. 22 in Business Week, the tribe had been lowered to a corporate credit rating of ‘B-’ with a negative outlook.
Turtle Talk 