Moody’s confirms SJM Holdings’ ratings, negative outlook

Jun 27, 2022 Newsdesk Latest News, Macau, Top of the deck  

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Moody’s Investors Service has confirmed Macau casino operator SJM Holdings Ltd’s ‘Ba3’ corporate family rating and the ‘B1’ rating on the backed senior unsecured bonds issued by Champion Path Holdings Ltd and guaranteed by SJM Holdings.

It also revised the outlook for the two entities to ‘negative’.

“The confirmation of the ratings reflects the completed refinancing of SJM Holdings’ loan facilities, which now provide the company with adequate liquidity for at least the next 12 months,” said Sean Hwang, a Moody’s assistant vice president and analyst, as quoted in a Monday note.

On Thursday, SJM Holdings confirmed it had clinched new syndicated loan facilities of up to HKD19 billion (US$2.42 billion), representing a HKD9-billion term loan facility and a HKD10-billion revolving loan facility.

Prior to that confirmation, a number of investment analysts had said in May that SJM Holdings had about three months of cash liquidity at its ongoing level of cash burn, amid an earnings environment constrained by the pandemic.

Moody’s said in its Monday memo that it had revised the outlooks on SJM Holdings and Champion Path to ‘negative’ from ‘ratings under review’, adding that the day’s summary “concludes the review for downgrade initiated on 25 October 2021”.

The ‘negative’ outlook reflected the “high uncertainty surrounding the pace and extent of SJM Holdings’ earnings recovery, and our view that SJM Holdings’ financial leverage will likely remain very high over the next 12 to 18 months,” wrote Mr Hwang.

Obligations rated ‘Ba’ are regarded by Moody’s as having “speculative elements” and carry “substantial credit risk”.

Those rated ‘B’ are considered ‘speculative’ and carry “high credit risk”.

In July last year, SJM Holdings had a first-phase opening for the HKD39-billion Grand Lisboa Palace resort (pictured) on Cotai.

(Updated June 28, 6.05pm)

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