Moody’s Investors Service Inc has confirmed the “Baa3” rating of United States-based casino operator Las Vegas Sands Corp and the “Baa2” rating of its Macau-based unit Sands China Ltd. The rating outlook for both companies is “negative”, said the ratings agency in a report on Tuesday.
The actions concluded the review for downgrade initiated on March 16, 2020, said Moody’s.
Sands China is a 70-percent owned subsidiary of Las Vegas Sands. The parent also runs the Marina Bay Sands casino resort in Singapore.
The confirmation of Las Vegas Sands rating “reflects the company’s good liquidity, including sizeable cash balances and revolver availability and the ability to withstand a meaningful but temporary cash burn from weakened operating performance and facility closures related to the coronavirus,” said the ratings agency.
Moody’s said it expected the group’s earnings and credit metrics to “weaken while operations in the U.S., Macau, and Singapore are negatively affected by facility closures and reduced travel and leisure spending”. Earnings and credit metrics nonetheless “will improve when economic conditions recover,” added the report.
The negative outlook reflected “the uncertain duration and recovery from the coronavirus-related earnings and cash flow pressure, which will lead to higher debt even when property earnings recover,” stated Moody’s.
Sands China on Wednesday proposed to issue an aggregate of US$1.5-billion in senior unsecured notes. The company said it intends to use the net proceeds of approximately US$1.48 billion from the offering “for incremental liquidity and general corporate purposes”.
In its report, Moody’s also assigned “Baa2” ratings to Sands China’s proposed note offering.
The ratings agency said additionally that the group’s credit metrics would be “very weak in 2020”.
It added: “Restoring credit metrics to levels in line with Moody’s expectations for [Sands China’s and Las Vegas Sands’] ratings in 2021 or 2022 could be challenging depending on how much cash is consumed during the period of reduced visitation and the level of earnings recovery, both of which factors are highly uncertain given the unprecedented consumer and economic effects of the coronavirus pandemic.”
