The credit rating outlook for Macau casino operator Wynn Macau Ltd and its parent, Wynn Resorts Finance LLC, has been changed from “stable” to “positive”, as they are expected to see improved leverage this year amid Macau gaming market’s recovery. That is according to Moody’s Investors Service Inc, in a Tuesday memo on a rating action for the group.
Moody’s also affirmed the senior unsecured notes of Wynn Macau Ltd and Wynn Las Vegas LLC – the latter a wholly-owned subsidiary of Wynn Resorts Finance – at “B1”.
Wynn Macau Ltd is a 72.2-percent owned subsidiary of Wynn Resorts Finance, which in turn is a wholly-owned subsidiary of U.S.-based gaming operator, Wynn Resorts Ltd.
Moody’s stated: “The rating affirmation and positive outlook reflect our projection of improved leverage for Wynn [Resorts Finance] in the mid 5x debt/EBITDA [earnings before interest, taxation, depreciation and amortisation] range for 2024.”
The institution added this was supported by Macau’s gaming market having “recovered significantly” and by “continued strong performance at the company’s Las Vegas [Nevada] and Encore Boston Harbor [Massachusetts] properties,” in the United States, that had supported the group’s revenue and EBITDA growth.
The rating agency further noted its outlook view reflected a “recent reduction in debt, with nearly US$1.2 billion of debt permanently reduced”.
Moody’s said additionally: “The positive outlook also incorporates our view that the company will maintain good liquidity, with ample cash balances.”
The ratings house gave a “B1” corporate family rating to Wynn Resorts Finance, saying it reflected the company’s reputation and its “successful track record of building large, high-quality destination resorts”.
It observed: “The credit profile also incorporates [the fact] that Wynn’s Macau operations have recovered significantly, reducing leverage levels. Wynn’s good liquidity and relatively low cost of debt capital also support the ratings.”
One of the key credit concerns for Wynn Resorts Finance is its revenue and cash flow remains “heavily concentrated” in its Macau operations.
“We expect that Wynn will pursue other large resort development opportunities around the world, such as its development in the United Arab Emirates. As a result, at times the company’s leverage will increase due to partially debt-financed development projects,” said the ratings agency.
