Jul
30
How risky has Harrah’s gotten?
Filed Under CityCenter, Harrahs, Las Vegas, Las Vegas Casinos, MGM Mirage | Leave a Comment
Here is an excellent article from Bloomberg that discusses MGM’s City Center problems, and also mentions something interesting about Harrahs.
MGM’s City Center
Surprise, surprise. Even the king of Las Vegas casino companies is having trouble getting its CityCenter project financed. Basically, the CityCenter joint venture with Dubai World is looking for a $3.5 billion loan, but has only been able to scrape together $2 billion so far, leaving CityCenter to look for the remaining loans outside the US.
Harrah’s
One other interesting thing in this article is that it says Harrah’s bonds are trading at 70 cents on the dollar for a 17% yield. That means if you hold the bonds until their maturity (assuming of course the company doesnt go bankrupt before that), you could generate a 17% return for yourself. Now compare this to the stock market that has historically returned 11-12% per year, and it gives you an idea of how risky investors think Harrahs is right now. Remember, these are bonds, which are supposed to be less risky than stocks (and less risk usually means lower returns).
