GGRAsia – Moody’s keeps GEN Singapore rating, outlook now stable

Moody’s keeps GEN Singapore rating, outlook now stable

Feb 14, 2023 Newsdesk Latest News, Singapore, Top of the deck

Moody’s Investors Service Inc has confirmed the ‘A3’ issuer rating of casino developer and operator Genting Singapore Ltd. The ratings agency changed the firm’s outlook to “stable”, from “negative”, according to a report it issued on Monday.

Genting Singapore is the operator of the Resorts World Sentosa casino resort (pictured) in Singapore. Long-term obligations rated ‘A’ by Moody’s are considered “subject to low credit risk”.

The casino firm is investing SGD4.50 billion (US$3.39 billion) in the expansion of Resorts World Sentosa, as part of the extension of its casino licence until 2030.

“The change in outlook to stable and [the] ratings affirmation reflect our expectation that credit metrics across the Genting group of companies will improve over the next 12 to 18 months, supported by continued recovery in operating performance,” said Moody’s analyst Yu Sheng Tay, quoted in the report.

Moody’s has said it expects earnings for Genting Singapore to recover, as the Singapore casino market rebounds from the Covid-19 pandemic.

The ratings agency said it expects the company’s earnings before interest, taxation, depreciation and amortisation (EBITDA) to increase to about SGD990 million in 2023. The expectation of such improvement “reflects ongoing recovery following the lifting of border restrictions in Singapore in April last year,” stated Moody’s.

Genting Singapore’s earnings however “are unlikely to return to 2019 levels until 2024/2025,” added the institution.

The casino firm “is dependent on the recovery of Singapore’s tourism sector and faces cost pressures from rising utilities and labour costs,” it stated, observing also that casino tax rates in Singapore “have increased since March 2022”.

Nonetheless, Genting Singapore’s credit metrics “will remain strong, supported by its net cash position of SGD3.1 billion as of 30 June 2022,” noted Moody’s.

“The substantial cash holdings, along with cash flow generation, will also help fund expansion works at Resorts World Sentosa without the need for debt,” the ratings agency suggested.

On Monday, Moody’s also affirmed the ‘Baa2’ issuer ratings of the Malaysia-based parent, Genting Bhd. Obligations rated ‘Baa2’ are subject to “moderate credit risk”. In the report, Moody’s Mr Tay stated that Genting Bhd would “benefit from full-year earnings contribution from Resorts World Las Vegas” in Nevada, in the United States.