GGRAsia – Fitch not rating Imperial Pacific unsecured notes

Fitch not rating Imperial Pacific unsecured notes

Feb 09, 2017 Newsdesk Latest News, Top of the deck, World

Fitch Ratings Inc says it is not assigning a rating to Hong Kong-listed Imperial Pacific International Holdings Ltd’s issuance of US$70-million, 8.5-percent per annum unsecured notes announced on Thursday. Imperial Pacific has a casino licence for the Pacific island of Saipan.

The ratings house said in a release on Thursday: “These unsecured notes are different from the U.S.-dollar senior secured notes that the company said on 11 January 2017 that it planned to issue. Fitch was provided with documentation for the latter and the agency has assigned an expected ‘B-(EXP)’ rating to the proposed issuance.”

In Fitch’s glossary of international issuer and credit rating scales, ‘B’ indicates the presence of “material default risk,” with capacity for continued payments “vulnerable to deterioration in the business and economic environment”.

The ratings body said in its Thursday memo: “The US$70-million unsecured notes issuance does not immediately affect Imperial Pacific International’s issuer default rating of ‘CCC’ as the company’s ratings are constrained by the higher VIP customer-receivable risks it faces due to the lack of junkets being licensed.”

The memo further stated: “The rating is also limited by Imperial Pacific International’s material capex [capital expenditure], which requires funding that will not be sufficiently covered by this debt issuance, and the concentration of its business on the volatile high-rolling VIP segment.”

But Fitch said that “active tourism development in Saipan and Imperial Pacific International being the only casino operator in Saipan to enjoy the island’s legal and geographical advantages, support Imperial Pacific International’s ratings.”

In January, Fitch had downgraded Imperial Pacific’s issuer default rating to ‘CCC’ from the ‘B(EXP)’ expected rating assigned to it in September 2016. The ‘CCC’ assessment indicates the belief there is “substantial credit risk” and that “default is a real possibility”.

Imperial Pacific unit Best Sunshine International Ltd is currently operating a temporary casino (pictured) – which opened in July 2015 – on Saipan, the main island of the Commonwealth of the Northern Mariana Islands (also known as CNMI), a U.S. jurisdiction.

In a January 4 filing, Imperial Pacific said it planned to launch its permanent casino “in the first quarter of 2017”.

On February 2, Imperial Pacific reported that its monthly rolling chip turnover – a measure of performance in the VIP gambling segment – had reached an all-time high in January, at nearly US$5.59 billion.