Standard & Poor's Ratings Services immediately lowered its corporate credit rating on the Atlantic City-based company to 'D' from 'CCC'.
Donald Trump
In addition, the issue-level rating on the senior secured notes co-issued by TER and Trump Entertainment Resorts Funding Inc. was lowered to 'D' from 'CCC-'."The rating actions stem from the company's announcement that it will forego making the Dec. 1, 2008 interest payment on its senior secured notes," says Standard & Poor's credit analyst Ben Bubeck.
"A payment default has not occurred relative to the legal provisions of the notes since there is a 30-day grace period to make the payments.
Ben Bubeck
"However, we consider a default to have occurred when a payment related to an obligation is not made, even if a grace period exists, when the nonpayment is a function of the borrower being under financial stress - unless we are confident that the payment will be made in full during the grace period."Bubeck says that if the interest payment due under the senior secured notes is not paid during the 30-day grace period, holders of 25% of the outstanding principal amount of the notes would be permitted to accelerate the maturity of the notes.
"This would result in a cross-default under the company's senior secured term loan (unrated), the analyst says.
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