Macau casino operator MGM China Holdings Ltd has had its credit outlook updated to ‘stable’ from ‘negative’ by Moody’s Investors Service, the latter said in a Monday memo.
“MGM China has experienced sustained improvement in Macau, which has accelerated significantly over the last 12 months,” stated Moody’s.
MGM China said in a February announcement that its 2023 total revenue grew to HKD24.68 billion (US$3.16 billion), an increase of 368.5 percent on 2022, and 108.4 percent of pre-pandemic trading year 2019’s HKD22.77 billion.
The ratings agency also affirmed MGM China’s senior unsecured notes rating at ‘B1’.
MGM China runs the resorts MGM Macau and MGM Cotai (pictured) in the Chinese gambling hub.
It is 55.95-percent owned by United States-based MGM Resorts International.
Moody’s reaffirmed MGM Resorts’ ‘B1’ corporate family rating; ‘B1-PD’ probability of default rating, and its ‘B1’ senior unsecured notes. MGM Resorts’ speculative-grade liquidity rating is unchanged, at ‘SGL-2’.
Moody’s said: “The stable outlook for MGM Resorts and MGM China reflects the continued strong performance of the company’s U.S. regional and Las Vegas operations, with a recovery in Macau operations.”
The institution added: “The stable outlook also incorporates the company’s good liquidity, with substantial cash balances and revolver availability.”
Bill Hornbuckle, chief executive and president of MGM Resorts, had stated during the group’s recent fourth-quarter earnings call, that in January MGM China “broke through 20 percent” in terms of the Macau market share barrier.
Moody’s nonetheless gave guidance that the parent MGM Resorts’ rating was “constrained” by the company’s “high leverage, including the company’s sizeable leases on the balance sheet”.
The institution added: “Moody’s expects MGM [Resorts] will actively pursue large integrated resort development projects that would result in elevated leverage for some time until it completes the projects.”
The ratings agency did not specify any particular projects. Mr Hornbuckle did however mention during an investor forum last week, the group’s pursuit of an upstate licence in New York in the United States, and a non-casino hotel scheme in Dubai in the United Arab Emirates. The group is also developing Japan’s first casino resort, to be located in Osaka and scheduled to open in 2030.
