Moody's Assigns "Loss-Given-Default" Rating to CCM Merger Inc. (dba MotorCity Casino)

excerpted from

IBL - InterNet Bankruptcy Library

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T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, October 17, 2006, Vol. 10, No. 247

CCM MERGER: Moody's assigns Loss-Given-Default Ratings

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In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the gaming, lodging and leisure sectors, the rating agency confirmed its B1 Corporate Family Rating for CCM Merger Inc.

Moody's also revised or held its probability-of-default ratings and assigned loss-given-default ratings on these debentures:

Debt Issue	Old POD Rating	New POD Rating	LGD Rating	Projected Loss-Given- Default
Five Year Senior Secured Revolver	B1	Ba3	LGD3	35%
Seven Year Senior Secured Term Loan B	B1	Ba3	LGD3	35%
8% Senior Secured notes	BR	B3	LGD5	88%

Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds.

Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha-numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations.

Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%).

CCM Merger Inc. owns and operates MotorCity Casino in Detroit,Michigan.

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