By BRIAN HALLENBECK

A leading credit rating agency has lowered its rating on the Mashantucket Pequot Tribe, whose Foxwoods Resort Casino reported late last week that the casino's net revenues declined 4.2 percent in the three months that ended Dec. 31.

Before the quarterly report's release, Moody's Investors Service downgraded the tribe's corporate family rating to Ca from Caa3 and its probability-of-default rating to Ca-PD from Caa3-PD. Moody's lowered its rating on the tribe's senior credit facilities, or loans, to Caa1 from B2. Such ratings indicate a high degree of risk.

The corporate family rating and Moody's issuance of a "negative" rating outlook for the tribe reflect the agency's belief that "the tribe will ultimately go through a debt restructuring that will involve some level of impairment to creditors."

The tribe defaulted last year on the terms of a 2013 restructuring and subsequently reached a "forbearance agreement" with senior lenders that expires June 30. Under the agreement, the tribe's senior lenders can block interest payments to junior lenders. The blockage is not considered a payment default, Moody's noted in its rating action.

Keith Foley, a Moody's analyst and senior vice president, said it's not unusual for an entity to undergo more than one restructuring.

Foxwoods, which shares the Connecticut casino market with Mohegan Sun, has been downsizing in the face of increasing competition from Twin Rivers Casino in Lincoln, R.I., Resorts World at Aqueduct in New York City, Empire City Casino at Yonkers (N.Y.) Raceway and Sands Bethlehem in Pennsylvania.

In its quarterly report, posted on the website of the Electronic Municipal Markets Access system, Foxwoods indicated its net revenues totaled $223.4 million, down from 233.2 million in the same quarter the previous year. Gaming revenues of $192 million were down 6.1 percent while nongaming revenues of $54.6 million were up 8.2 percent.

The decline in net revenues was partially offset by a $6.9 million, or 3.5 percent, reduction in operating expenses. Payroll costs were lower by $8 million, or 9.4 percent, as the number of the casino's full-time equivalents (employees) was cut to 5,150, a 13.9 percent reduction.

Moody's, in its rating action, noted that the tribe's ability to meet its obligations "depends entirely on revenue and earnings coming from its Connecticut casino. … Like other regional gaming companies throughout the U.S., (the tribe's) earnings have been unfavorably impacted by a combination of reduced spending trends by gaming consumers, increased competition and more aggressive promotional activity."

The tribe expects to add a revenue source this year when an outlet mall under construction at Foxwoods opens. Under a ground lease, Tanger Factory Outlet Centers, the mall's owner, will pay the tribe a base rent plus a percentage of rents received from sub-tenants, according to the tribe's quarterly report.

Tanger is bearing the cost of construction.

b.hallenbeck@theday.com

Twitter: @bjhallenbeck