This study attempts to identify financial factors that affect bond ratings of hotel and casino firms by estimating a bond-rating prediction model. The ordinary least square model based on 5-year weighted average values of financial variables was able to correctly predict 60% of the bond ratings of hotel and casino firms rated by Moody’s. The model shows that number of times interest earned ratio, return on assets, and total assets have a significant impact on the bond rating of hotel and casino firms. The findings suggest that large hotel and casino firms with high return on assets and great debt service coverage tend to receive high bond ratings from Moody’s.
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