Genting Berhad, a Malaysia-based conglomerate with global casino interests, is likely to see its “earnings and cash flow grow, but there is no buffer under the company’s credit metrics for further debt incurrence,” stated Moody’s Investors Service Inc in a memo published on Tuesday.
The company has a ‘Baa2’ credit rating from Moody’s that is “three notches above the scorecard-indicated outcome of Ba2,” said the financial institution in a periodic review.
“The difference reflects our expectation that Genting Bhd’s earnings will start to recover in the second half of 2025, as well as the company’s diversified operations worldwide across different industries, long operating track record, proactive refinancing and good access to funding,” said Moody’s analyst Anthony Prayugo and his colleague Jacintha Poh, associate managing director.
Moody’s Baa2 rating indicates an obligation is medium grade for investment purposes, with moderate credit risk, as it might have some speculative elements.
Moody’s noted Genting Bhd generates most of its earnings and cash flow from Genting Malaysia Bhd and Genting Singapore Ltd, the latter rated “A3”, with a ‘stable’ outlook.
Genting Malaysia has a casino monopoly via Resorts World Genting near the Malaysian capital Kuala Lumpur. Genting Singapore is one half of a casino duopoly in Singapore, via its Resorts World Sentosa (RWS) property.
The Genting Malaysia unit posted a circa US$12-million profit in the first quarter, despite a revenue decline. Genting Singapore’s first-quarter profit fell 41 percent year-on-year.
Moody’s observed that the Genting Bhd parent’s rating is constrained by “risks stemming from” its “expansion appetite”.
The rating agency added: “Although Genting Bhd has a strong track record of execution, reliance on debt to fund any potential expansion projects could exert downward pressure on Genting Bhd’s rating.”
Genting Bhd owns and operates Resorts World Las Vegas, Nevada, in the United States, via its subsidiary Resorts World Las Vegas LLC.
In separate developments, the board of the Singapore entity has approved a total investment of about SGD6.80 billion (US$5.29 billion) for ‘RWS 2.0’, a phased upgrade and expansion of the casino complex.
In September last year, Genting New York LLC – an indirect wholly-owned subsidiary of Genting Malaysia – announced plans to invest up to US$5 billion if it gets one of the three likely downstate New York casino licences in the United States.
Moody’s observed in its Tuesday periodic review: “Genting Bhd benefits from a degree of geographic and business diversification.”
Moody’s also covered in its review Genting Overseas Holdings Ltd, saying the latter’s ‘Baa2’ rating reflected its 53 percent ownership of Genting Singapore and the institution’s “expectation that the dividend income from Genting Singapore will adequately cover the interest expense on Genting Overseas Holdings’ US$1.5-billion notes maturing in 2027”.
