NagaCorp Ltd’s credit rating of ‘B1’ reflects the “dominant position” of its casino resort NagaWorld (pictured) in Phnom Penh, Cambodia, says a Wednesday update from Moody’s Investors Service Inc.
The rating also incorporates the expectation of “a recovery in NagaCorp’s operating performance in 2022 following the reopening of its casinos in September 2021 and further easing of pandemic-related restrictions given the growing vaccination coverage in Cambodia”.
Hong Kong-listed NagaCorp’s rating remains superior to Cambodia’s sovereign rating of ‘B2’, according to Moody’s.
“NagaCorp’s rating is one notch above Cambodia’s sovereign rating, based on our assessment that the likelihood of the company being affected in the event of a weakening in Cambodia’s economic fundamentals is low,” the institution stated.
NagaCorp, which has a monopoly for casino operations in Phnom Penh, is “insulated from domestic conditions” in Cambodia, “to a certain degree, because it generates most of its revenue from tourists and does not rely on local banks or capital markets for funding,” it added.
Nonetheless, Moody’s rates the outlook for NagaCorp as “negative”, compared to a ‘stable’ assessment for the host nation’s credit outlook.
“NagaCorp’s rating is constrained by its single-site operations as well as exposure to political risk and the evolving regulatory framework in Cambodia,” wrote Moody’s analytic team, Sweta Patodia, Jacintha Poh, and Vikas Halan.
Earlier this month, NagaCorp reported a US$147.0-million loss for full-year 2021, compared to a US$102.3-million profit in the prior year.
The casino at NagaWorld was shut from early March to September 15 last year, as a result of Covid-19 countermeasures in Cambodia.
In its full-year results, NagaCorp said that as of December 31, it had cash and deposits amounting to US$125.1 million.
The group added that following the full repayment of the 2021 senior notes – in the amount of US$300 million plus interest – the company would “not have any debt repayment obligation until July 2024”.
