Last week, Boyd Gaming (NYSE: BYD) completed the sale of its 5% interest in FanDuel to Flutter Entertainment (NYSE: FLUT), hauling in proceeds of $1.758 billion along the way. That influx of cash will be used to reduce debt, which could boost the appeal of the regional casino operator’s remaining corporate bonds.
Boyd Gaming bonds look appealing on the company’s debt-reduction efforts and vibrancy in the Las Vegas locals segment. (Image: Boyd Gaming)
In a new report to clients, Gimme Credit analyst Kim Noland notes Boyd likely pulls in $1.4 billion after taxes
via the FanDuel sale – enough to pare outstanding liabilities while fortifying return of capital to shareholders. The Orleans operator has been one of the most dedicated
buyers of its own shares in the gaming industry, significantly reducing its shares outstanding count.
Boydʼs use of FanDuel proceeds to repay debt, including the outstanding balance under its revolver and term loan A, will result an improvement in lease-adjusted leverage, that we now estimate in the low 2x range pro forma the transaction,” observes Noland.
She adds that against the backdrop of Boyd generating an estimated $450 million in cash flow, the operator’s corporate debt maturing in 2027, which sport a yield-to-worst of 5.1%, are rated “outperform” amid recent bullish price action.