Fitch Ratings Inc says the Macau gaming market is likely to recover quicker from the negative impact of the Covid-19 pandemic than Singapore and Las Vegas, Nevada, in the United States. That is because of Macau’s proximity to its feeder markets, said the ratings agency in a Wednesday report focused on casino group Las Vegas Sands Corp.
The institution said it was forecasting approximately 60-percent, 70-percent and 65-percent declines in market wide gaming revenues in Las Vegas, Macau and Singapore in 2020, respectively.
Fitch said it expected “stronger recovery in Macau given its proximity to its feeder markets and slower recovery in Las Vegas and Singapore given these markets’ greater reliance on air travel from their respective feeder markets.”
China announced this week that it would be reinstating tourist visas to Macau for Guangdong province in late August, and for rest of mainland China’s provinces in late September.
In Wednesday notes, the ratings agency said that global casino operators Las Vegas Sands and MGM Resorts International had a “strong liquidity position” to weather a “more challenging recovery trajectory” as the coronavirus pandemic “continues to hinder international and domestic tourism.”
Fitch said it had affirmed the ‘BBB-‘ long-term issuer default ratings of Las Vegas Sands, and two of its units with operations in Asia: Macau casino operator Sands China Ltd; and Marina Bay Sands Pte Ltd, which runs the Marina Bay Sands complex in Singapore. The group’s rating outlook was revised to negative from stable.
“The revision of the rating outlook to negative reflects weaker operating conditions in Las Vegas Sands’ markets than those Fitch previously assumed at the onset of the pandemic,” said the ratings agency.
The institution also said it believed the parent company was “slightly stronger” relative to the stand-alone subsidiaries “because of the diversification benefits it receives from the exposure to three distinct international markets.”
In a separate Wednesday report, Fitch also said it had affirmed the ‘BB-’ long-term issuer default ratings of U.S.-based casino operator MGM Resorts International, and of its Macau unit MGM China Holdings Ltd. The rating outlook was negative, it added.
The rating reflected MGM group’s “strong liquidity position to weather the challenging operating environment and allow MGM to return to within its downgrade sensitivity thresholds by 2023,” stated Fitch.
The group was in a “favourable liquidity position” heading into the pandemic, “but it also took proactive steps to increase cash as operations halted,” including raising unsecured debt.
The negative rating outlook of the MGM group reflected the “risks and uncertainty the global gaming industry is facing from the pandemic.”
In Macau, said Fitch, casinos are still recording “limited volumes” as regional travel restrictions “are keeping visitation at de minimis levels, although these restrictions are expected to be loosened over the next couple of months.”
