Moody’s Investors Service Inc has confirmed its “Baa3” rating of casino operator Las Vegas Sands Corp and the “Baa2” rating of its Macau-based unit Sands China Ltd. The rating outlook for the group was changed to ‘stable’ from ‘negative’, said the ratings agency in a recent report.
“The rating affirmation and stable outlook reflects our expectation that Las Vegas Sands’ financial leverage will improve significantly over the next two years, as Macau’s gaming market will recover strongly after China recently lifted its pandemic-related travel restrictions,” stated Moody’s.
It added: “The expected recovery in Macau, coupled with the recovery already underway in Singapore will support revenue and EBITDA [earnings before interest, taxation, depreciation, and amortisation] growth and drive leverage down.”
Las Vegas Sands also operates the Marina Bay Sands casino resort in Singapore. Last month, the casino group said it had been authorised by Singapore’s authorities to delay by 12 months the deadline to start construction work for the extension of Marina Bay Sands.
Moody’s also said the ‘stable’ outlook incorporated the view that Las Vegas Sands’ liquidity “will remain strong, with expectation that the company will improve revolver availability at Sands China, as cash flow improves and borrowings are repaid”.
Group-wide, Las Vegas Sands reported a full-year 2022 profit of just over US$1.83 billion, supported by a net gain after tax of nearly US$2.90 billion, on disposal of its operation in Las Vegas, Nevada, in the United States. In Macau, net loss for Sands China was US$1.58 billion in 2022, compared to US$1.05 billion in 2021.
The sale of the Las Vegas operation further “enhanced” Las Vegas Sands’ liquidity, “while providing flexibility to continue to reinvest in Macau and Singapore,” stated Moody’s.
“The company’s liquidity is strong, with US$6.3 billion of consolidated cash and nearly US$2.5 billion of undrawn revolving credit facility capacity,” it added.
Nonetheless, Las Vegas Sands’ financial leverage “will remain elevated over the near term, as the recovery is still in its early stages, and it will take time to bring leverage back towards pre-pandemic levels,” warned the ratings agency.
In late January, Las Vegas Sands amended with banking partners certain term loans regarding a US$1.50-billion revolving credit agreement. As part of the amendment, the casino group faces limitations regarding the payment of dividends until the end of 2023.
Moody’s said in a separate note that it expected Macau’s gross gaming revenue (GGR) this year to be about 45 percent of 2019’s level, i.e., the period before the onset of the Covid-19 pandemic. The institution stated that the mass-market GGR could “improve to 75 percent” of 2019 levels this year, and fully recover in 2024.
Macau’s casino GGR was up 246.9 percent year-on-year in March, to just under MOP12.74 billion (US$1.58 billion). First-quarter GGR tallied MOP34.64 billion, up 94.9 percent on the prior-year’s quarter.
