Macau casino operator Sands China Ltd hopes to issue debt to raise an as yet undetermined sum to repay outstanding term loans and to spend on general corporate purposes, including capital expenditure.
The company told the Hong Kong Stock Exchange on Thursday that it is proposing to offer the debt paper to professional investors that are qualified institutional buyers, non-U.S. persons outside the United States or both.
The parent company of Sands China, Las Vegas Sands Corp, has issued a separate written statement saying it plans to issue senior unsecured notes denominated in U.S. dollars, and that the principal amounts, interest rates and other important terms of the offering will be determined at the time of pricing.
Sands China told the stock exchange the net proceeds from the sale of the notes would be used to repay outstanding term loans made available through a wholly-owned subsidiary, Venetian Macau SA. Venetian Macau SA and its subsidiaries currently have term loans, term-loan commitments and a revolving credit facility; approximately US$4.8 billion outstanding as of June 30, 2018, according to Fitch Ratings Inc.
In a release on Thursday, Fitch said it has assigned a ‘BBB-‘ rating to Sands China’s announced senior unsecured notes. In addition, the rating agency has also affirmed the issuer default ratings for Las Vegas Sands and its subsidiaries at ‘BBB-‘ and the existing secured debt at ‘BBB’.
On Wednesday, Las Vegas Sands revealed estimates of proposed capital spending on income-producing projects and maintenance in Macau until 2020. The company will spend just over US$1 billion this year, US$1.25 billion next year and US$770 million in 2020. About US$500 million will be spent on maintaining infrastructure in each of the three years. The second biggest proposed expenditure will be the expansion, renovation and rebranding of Sands Cotai Central to The Londoner.
In a Thursday statement, Moody’s Investors Service Inc said it has assigned a “Ba1” rating to the proposed senior unsecured notes to be issued by Sands China. The rating house said additionally that the rating outlook for Las Vegas Sands “was revised to positive from stable”.
“Las Vegas Sands decision to issue unsecured debt places the company closer to a low investment grade rating,” said Keith Foley, a senior vice president at Moody’s, in a prepared statement. “Removing a significant majority of secured debt in the consolidated capital structure remains the primary impediment towards an investment grade rating,” he added.
For the proposed debt issue, Sands China said it has appointed joint bookrunners Barclays Capital Inc, Goldman Sachs & Co LLC and Merrill Lynch, Pierce, Fenner & Smith Inc. The joint bookrunners will determine the pricing of the notes through a book-building exercise.
Las Vegas Sands reported on Wednesday a year-on-year increase of 1.8 percent in net income in the second quarter of 2018 to US$556 million.
