Fitch Ratings Affs Rtgs of Boyd Gaming at 'BB-'; Outlook Now Stable.

Business Editors

CHICAGO--(BUSINESS WIRE)--July 26, 2002

Fitch Ratings has affirmed the ratings on Boyd Gaming's (NYSE:BYD) senior unsecured notes at 'BB-' and raised the rating on the company's senior subordinated notes to 'B+' from 'B'. At the same time, Fitch has assigned a 'BB+' rating to BYD's $500 million bank credit agreement. Approximately $900 million in public debt securities are affected by the rating action. The Rating Outlook has been revised to Stable from Negative.

The revised Rating Outlook reflects BYD's progress in reducing leverage, the refinancing of the company's credit agreement and solid operating performance. Following the opening of the casino at Delta Downs and the $37 million equity contribution to The Borgata made during the first quarter 2002, BYD will focus on debt reduction for the remainder of the year. BYD reduced debt by $40 million during the second quarter to $1.1 billion and will apply free cash flow after $30 million in maintenance capital spending during the second half of 2002 toward debt reduction. As a result, leverage should show meaningful improvement by Dec. 31, 2002, from 4.4 times (x) for the last 12 months ended June 30, 2002, and 5.1x at Dec. 31, 2001.

The refinancing of BYD's bank credit agreement and the issuance of $250 million in 8.75% senior subordinated notes in April 2002, extended BYD's debt maturities and eliminated the prior refinancing risk. The current bank credit agreement has capacity to fund the $200 million in 9.25% senior notes maturing in October 2003. BYD's amended and restated credit agreement includes a $400 million secured revolver due 2007 and a $100 million secured term loan due 2008.

BYD's diversified property portfolio continues to generate solid operating results. Excluding Delta Downs, which experienced a strong casino opening in February 2002, same store EBITDA after corporate expense rose 12.7% to approximately $65 million during the second quarter 2002 compared to the same quarter last year. All eight of the company's operating units showed improved results. This follows several quarters of continued solid operating performance.

BYD is responsible for all cost overruns related to the company's joint venture project in Atlantic City, The Borgata. The project is currently on schedule and on budget. As the opening of The Borgata moves closer (summer 2003 expected opening), Fitch Ratings recognizes that the declining risk associated with potential claims that could be made under completion guarantees, and acknowledges BYD's ownership stake provides further asset support to the company's risk profile.

The upgrade of the subordinated notes reflects the improved collateral support for the company's debt.