UPDATE 3-Moody's sees Sandy hit to casinos, benefit to retailers

Tue Nov 6, 2012 12:53pm EST

* Home Depot, Lowe's to get sales boost on storm recovery
    * Railroads CSX, Norfolk Southern could see lower cash flows
    * Manpower revenues could take 5 pct hit in Q4
    * No credit downgrades or negative reviews likely after
Sandy


    By Nick Zieminski
    Nov 6 (Reuters) - Superstorm Sandy will slash earnings at
New Jersey casinos and benefit home repair and discount
retailers but have limited impact on other sectors and is
unlikely to trigger credit downgrades, credit agency Moody's
Investors Service said. 
    While potential credit downgrades exist, no rating actions
were taken after Hurricane Irene flooded parts of the U.S.
Northeast last year and no ratings have been put on review for
downgrade or negative ratings after Sandy, Moody's told
investors on Tuesday. 
    Such actions were taken after Katrina in 2005, one of the
deadliest and most destructive hurricanes to ever slam the
United States. To the best of Moody's knowledge, large natural
disasters do not result in payment defaults, with the exception
of one non-rated transportation issue after Katrina.
    "Even for the hardest hit areas (by Sandy), we don't expect
to observe any payment default by our issues barring any
significant change in federal policy regarding FEMA and
emergency aid," said Gail Sussman, a managing director at
Moody's. 
    FEMA is the Federal Emergency Management Agency. Sandy has
killed at least 113 people in the United States and Canada and
knocked out power to millions of people. It has swamped seaside
towns and inundated New York City's streets and subway tunnels.
    Sandy killed 69 people in the Caribbean.
    Electric utilities including Consolidated Edison 
suffered costly damage but should recover their costs, Moody's
said. Wireless telecommunications service providers such as
Verizon and AT&T were also hurt, but the affect on these
carriers will be "negligible".
    Building product companies that provide roofing-related
materials are apt to see stronger-than-usual fourth-quarter
results, Moody's said.
    Sandy's impact on the gaming and lodging industries is
centered on Atlantic City, Moody's said. Revenues there will be
down by 25 percent in both the fourth quarter and the first
quarter, and earnings will be down by up to 50 percent, Moody's
said. It said Caesar's Entertainment, Tropicana
Entertainment and single-property operators Revel Atlantic City
and Marina District Finance Co would be affected.
    The storm will not have material effect on U.S. retail
sales, but beneficiaries will include Home Depot and
Lowes Companies Inc, as well as discounters such as
Wal-Mart and Target.
    
    
    
    U.S. airlines Delta, United and JetBlue
 will see a minimal impact on their credit profiles,
Moody's said.
    U.S. East Coast freight railroads CSX Corp and
Norfolk Southern Corp have seen significant disruptions
and could see lower cash flows and higher costs in the current
quarter. The storm is not expected to affect long-term operating
performance, liquidity or credit ratings for the railroads.
    Fewer working days as a result of the storm could reduce
fourth-quarter revenue by about 5 percent at staffing services
company ManpowerGroup Inc and food services provider
Aramark Holdings Corp. Real estate services company Realogy
Group LLC could take a hit, while ServiceMaster Co and GCA
Services Group Inc stand to benefit from post Sandy recovery
work, Moody's said.
    Sandy will have minimal impact on revenues and operating
profits of healthcare providers and is unlikely to affect the
credit ratings of media companies, including cable operators,
newspaper publishes and outdoor advertisers. Fast-food
restaurants could see slightly lower sales and profits.
    Moody's and other credit agencies rate the debt profile of
companies, and their analysis sets the rates at which they can
borrow.