Fitch upgrades Bally Technologies debt ratings

Fitch raised Bally's issuer default rating by two notches, to "BB-" from "B" and its secured bank credit facilities to "BB+" from "BB/RR1." Fitch said the upgrades are due to Bally's "significant improvement in its operating and financial performance," which reflects its "substantially improved product pipeline."

The ratings remain at non-investment, or "junk," grade. Fitch said the rating outlook on Bally's remains positive.

"Bally's credit profile continues to improve rapidly since Fitch previously upgraded its IDR seven months ago," the ratings agency said. Many of the issues that weighed on the IDR in the past are now largely resolved, Fitch said, including concerns about risk related to an operating turnaround and accounting issues. It said the Las Vegas company should not have difficulty refinancing credit lines that expire this year and next.

Among Fitch's remaining concerns are ongoing litigation with a major competitor regarding patents, and a new product cycle that has been pushed back.

"Given Bally's current operating momentum, Fitch believes that credit metrics as of fiscal year-end June 30, 2008 will show further improvement," it said.

In morning trading, Bally's shares rose 96 cents, or 3.3 percent, to $29.90.