Caesars is planning a comeback. After Caesars Entertainment Operating Company (CEOC) emerges from bankruptcy sometime in the third quarter, Caesars will still have $14.6B in debt on its balance sheet. With a market cap of $1.64B, that still puts its total leverage at nearly 900%. This will be manageable until 2020 when $3.71 billion in principle and interest is due to Caesars Entertainment Resort Properties (CERP) and Caesars Growth Partners (CGP). Caesars will not have $3.71 billion available in 2020, so they will have to roll over that debt.

The problem is, by 2020, interest rates will be much higher and the terms they will get on rolling over that debt will not be pretty. Even if manageable, the rates they will likely get will suck out any free cash flow, and they’ll have to hobble along or declare bankruptcy again.

Until 2020 Caesars can grow, but the higher rates go until then, the more obvious the monolithic 2020 debt wall will become. It’s just a question of when markets will figure this out again. Even now, Caesars is paying between 7% and 11% on its fixed rate debt to CERP, quite high even as variable rates are low. The high interest is partly a concession to creditors who have already lost so much on the bankruptcy restructuring. Imagine what they’ll have to pay in service costs even if debt is successfully rolled over past 2020.

There are two ways Caesars can prepare for this. Neither of them are particularly attractive options. First, they can try to be extremely frugal and save up $3.71 billion over the next 30 months or so, somehow, but that would mean forgoing growth opportunities and seeing static or shrinking revenues. Caesars is not taking this path. They are hoping that they will be able to rollover debt past 2020 at reasonable terms, while in the meantime they are pinching pennies (with some decent results) and planning expansion, mainly in Las Vegas.