Moody’s has LVS, Sands China on downgrade watch
Moody’s Investors Service Inc says it has placed United States-based casino operator Las Vegas Sands Corp (LVS) and the latter’s circa 70-percent-owned Macau unit Sands China Ltd under review respectively for possible credit-rating downgrades. The parent also runs the Marina Bay Sands casino resort in Singapore.
“The review for downgrade is prompted by steep declines in visitation and gaming revenue in Las Vegas Sands Corp’s Macau and Singapore operations, as a result of the spread of the coronavirus that has restricted travel in the region as well as [the] expected reduced travel, consumer and business activity in the U.S.,” stated Adam McLaren, a Moody’s analyst covering gaming.
Items under review for possible downgrade include Las Vegas Sands’ ‘Baa3’ senior unsecured rating and Sands China’s ‘Baa2’ senior unsecured rating.
Moody’s statement – carrying Monday’s date – was issued prior to the Nevada state government ordering from Tuesday a state-wide shuttering of casinos there for 30 days.
Las Vegas Sands had already said on Tuesday it was closing temporarily its Las Vegas Strip casinos as a precaution against the spread of Covid-19.
Although all Macau casinos remain open – including those run by Sands China, despite a 15-day pause market-wide in February – factors including quarantine rules, health declarations and outright entry bans for citizens of foreign nations have coincided with a dramatic dip in casino gross gaming revenue (GGR) in Macau.
On Monday, several brokerages said they expected Macau’s March GGR to fall year-on-year by between 70 percent and 80 percent.
“The coronavirus is already having a negative effect on Las Vegas Sands Corp’s Macau casinos because containment efforts reduced visitation, including closing for 15 days in the month of February,” noted the ratings agency.
Moody’s said it could not quantify for how long anti-coronavirus measures might reduce tourism to the U.S., but noted it was likely particularly to hit the Las Vegas Strip, “because business travel, conferences, and independent leisure travel will decline”.
In Macau, the government has urged all six operators to avoid job losses during the current downturn where possible. All the current casino licensees face the likelihood of a public retender process for gaming rights in the city linked to the expiry in June 2022 of the current permits.
There has been some optimism among investors that tourism to Macau from mainland China – where according to the authorities Covid-19 infections have been reduced to a daily trickle of cases – might restart in May at the latest, after Macau had passed for weeks without any new infections within the city itself to add to the 10 it had initially reported. This week, seven new cases of Covid-19 imported from outside Macau were confirmed by the local authorities.
Las Vegas Sands has committed itself to spending hundreds of millions of U.S. dollars on the rebranding of its Sands Cotai Central resort in Macau to the Londoner Macao.
It was announced in April last year that Las Vegas Sands had pledged to the Singapore government to spend SGD4.5 billion (US$3.11 billion) to expand its facilities at Marina Bay Sands, coincidental with it casino licence there – issued under the city’s casino duopoly – being extended until 2030.
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