Feb 06, 2024 Newsdesk Latest News, Rest of Asia, Top of the deck  
Mohegan Tribal Gaming Authority’s non-investment grade credit rating of ‘Caa1’ with a ‘stable’ outlook reflects its “very high leverage, significant debt maturities in the next two years and large annual cash distributions” to the Mohegan Tribe, says a credit opinion update from Moody’s Investors Service Inc.
The authority, trading as Mohegan Gaming, launched in November its non-gaming operations at the Mohegan Inspire Entertainment Resort (pictured) in South Korea, the group’s first foray beyond the North America markets. On Saturday, Mohegan Inspire launched its foreigner-only casino.
Moody’s stated in its February 2 note, that the Mohegan entity that holds the Mohegan Inspire asset is an unrestricted subsidiary that is not involved in guaranteeing the debt of the group’s restricted subsidiaries.
Though the institution said “approximately U$1.4 billion of Mohegan’s total debt relates to the acquisition and development of the unrestricted properties,” including Mohegan Inspire and Niagara Resorts in Ontario, Canada.
Moody’s added that Mohegan Gaming’s leverage measured as debt to earnings before interest, taxation, depreciation and amortisation (EBITDA) was 7.8x at fiscal year-end September 30, 2023, compared to 6.3x and 6.7x for fiscal year-end 2022 and 2021, respectively.
“We project that Mohegan’s leverage will decline only slightly in the next 12 to 18 months,” said the institution.
“New debt issued primarily to finance the development of Mohegan Inspire… drove the increase,” added Moody’s.
The ratings agency noted that while Mohegan Inspire construction had been completed, it did “not expect the property to contribute significant earnings in 2024 because the opening will be in stages”.
Mohegan Inspire was likely to be “cash flow positive” by the end of 2024, said in mid-December Jody Madigan, chief operating officer of Mohegan Gaming. He was speaking during the earnings call for the group’s fourth-quarter fiscal results to September 30.
Moody’s observed in its update: “There is risk to this investment as there are other well-known gambling destinations in Asia such as Macau and Singapore.”
The institution said Mohegan Gaming’s total debt was US$3.4 billion at September 30, compared to US$2.8 billion and US$2.4 billion at September 30, 2022 and 2021, respectively. “Moreover, Mohegan will need to refinance a significant portion of its total debt in the next two years as approximately US$2.1 billion – excluding unamortised debt issuance costs and discounts – will mature,” stated Moody’s.
Nonetheless, the ratings agency said Mohegan Gaming’s ‘stable’ outlook “reflects the expectation that Mohegan’s revenue growth will normalise after the strong post-pandemic rebound, and that Mohegan will be able to gradually reduce debt-to-EBITDA leverage as the newly added properties produce incremental income.”
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