Moody’s Investors Service Inc has revised its outlook on senior secured loans of casino company Melco Crown (Macau) Ltd (formerly Melco Crown Gaming (Macau) Ltd) to ‘Ba3 positive’ from ‘Ba3 stable’.
The rating keeps that class of the casino company’s securities in the speculative category with significant credit risk. But Moody’s says the improvement reflects the low gearing of the business in relation to the ratio of debt to earnings before interest, taxation, depreciation and amortisation, which it says has fallen to 1.3x for the 12 months to March 31.
“Moody’s expects this ratio will stay below 1.5x for the next 12-18 months, and which is strong for its Ba3 rating,” adds Moody’s.
“The Ba3 secured loan rating continues to reflect the group’s stable and profitable operations at its City of Dreams and Altira casinos in Macau. But the rating is constrained by its concentration in a single location,” adds the research house.
“The revised outlook to positive reflects Melco Crown Macau’s improved credit profile, as reflected in the financial metrics of MCE Finance Ltd (Ba3 positive),” wrote Kaven Tsang, a Moody’s vice president and senior analyst.
Melco Crown Macau is the core operating entity of MCE Finance, capturing more than 95 percent of the latter’s net revenue.
MCE Finance is a subsidiary of Melco Crown Entertainment Ltd, which in turn is jointly owned by the Australia-based gaming operator, Crown Resorts Ltd (rated Baa2 stable by Moody’s) and Hong Kong-listed Melco International Development Ltd (unrated by Moody’s).
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”We expect Goa to quickly become a US$1 billion market as it transitions to land-based casinos (from US$150 million today), which is still just a fraction of India’s total GGR potential of US$10 billion to US$17 billion”
Analyst at Union Gaming Securities Asia