Fresh investment might delay Genting deleveraging: Fitch
Fitch Ratings Inc says Malaysian operator of casinos Genting Bhd “has the liquidity” to fund its existing development projects in Las Vegas, in the United States, and in Singapore. Any additional investments however might derail Genting’s deleveraging trajectory, warned the credit rating agency.
Genting Bhd said on Wednesday that its venture in Las Vegas had issued the day before US$1-billion worth of debt to finish and open the casino resort it is currently building there. The 4.625-percent senior notes due 2029 were issued by the company’s wholly-owned subsidiaries Resorts World Las Vegas LLC (RWLV) and RWLV Capital Inc.
Concurrent with the issuance of the notes, RWLV on Tuesday also closed a US$1.6 billion senior secured credit facilities, comprising a US$400 million term loan facility – fully drawn in connection with the closing – and a US$1.2 billion revolving credit facility.
Genting had said previously that its venture in Las Vegas would use the proceeds of the note offering to finish and open the casino resort it is currently building there.
In an announcement last October, the group said it would open the Las Vegas casino resort in 2020. Resorts World Las Vegas (pictured in a rendering) has been described as a “multibillion-dollar integrated resort” but a budget has not been disclosed. Investment analysts have previously mentioned a US$4-billion price tag.
The Genting group is also embarking in a multibillion-dollar expansion plan in Singapore, where its subsidiary Genting Singapore Ltd runs the Resorts World Sentosa casino complex. Genting Singapore would need to make a capital commitment of SGD4.5 billion (US$3.3 billion) as a condition of the Singapore government maintaining the current casino duopoly in the city-state until 2030.
Genting Singapore announced last week it was to pay back early – on a voluntary basis – a total of SGD680 million left outstanding from its SGD2.27-billion syndicated senior secured credit facilities.
Fitch confirmed in its latest report that it had given RWLV a long-term issuer default rating and senior unsecured rating of A-, with a stable outlook, and given its proposed senior secured revolver and term-loan facilities an A- rating.
The rating agency said it believed Genting “has the liquidity, leverage and free cash flow capacity to fund the development, and a track record of timing its capex to broadly match its operating cash flows, which helps the company to manage leverage during expansions”.
But it added: “However, any additional multibillion-dollar investments will likely delay Genting’s deleveraging trajectory, and may constrain its ability to deleverage to below one time, the level at which Fitch would consider negative rating action.”
The Genting group also has its sights on gaining a casino licence in Japan, where a project might involve a multibillion-dollar investment. That investment is to be done via Genting Singapore, which has been setting up a raft of subsidiaries in Japan, the latest ones in July last year.
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