Moody’s Investors Service Inc has downgraded Wynn Resorts Finance LLC’s corporate family rating to ‘B1’ from ‘Ba3’, and its senior unsecured notes to ‘B2’ from ‘B1’. The outlook on the company remains ‘negative’, the institution said in a recent announcement.
Wynn Resorts Finance is a unit of U.S.-based casino operator Wynn Resorts Ltd, which has business in Macau via Wynn Macau Ltd.
Moody’s said in its report that the senior unsecured notes Wynn Macau Ltd – the operator of the Wynn Macau and Wynn Palace casino resorts in that city – were also downgraded, to ‘B2’ from ‘B1’.
Obligations rated ‘B’ are considered speculative and are subject to high credit risk, according to Moody’s.
The rating downgrades reflect Moody’s expectation that the group’s credit structure “will remain weaker than pre-pandemic levels, because of the slow recovery in earnings amid lingering travel restrictions affecting Wynn’s Macau operations” due to the Covid-19 pandemic.
Moody’s said it expected Wynn’s consolidated earnings to remain “meaningfully below pre-pandemic levels at least through 2022,” because a recovery in gross gaming revenue in Macau “will likely be gradual and bumpy.”
“This expectation factors in the likely pattern of travel resumption and temporary suspensions, mainland China’s control” over exit visas for mainlanders to come to Macau, and uncertainty regarding “lifting of quarantine requirements for travellers from Hong Kong,” stated the ratings agency.
It added that “improved operating performance at Wynn’s Las Vegas properties and Encore Boston Harbor”, in the United States, was “not enough to fully offset the lingering weakness in Macau”.
As a result, Moody’s said it expected the casino group’s leverage to remain “elevated until a recovery is more fully realised in 2023.”
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