Casino operator Wynn Macau Ltd’s fresh notes as an add-on to its senior unsecured notes due in 2028, will carry a face value of US$650 million, says a Monday note from Moody’s Investors Service Inc.
In a Hong Kong filing the same day, the casino business had said the final value of the new notes – due to bear 5.625 percent interest – was still to be determined as of the filing.
“The proposed US$650 million add-on… does not impact the ‘B1’ rating” of the note series, observed the ratings house.
Wynn Macau Ltd runs the Wynn Macau property on Macau peninsula, and Wynn Palace on Cotai.
Proceeds from the add-on note offering would “be used to facilitate repayment of a portion of the amounts outstanding under the Wynn Macau credit facilities, including the secured term loan and revolving credit facility that are due in 2022,” stated Moody’s.
“The refinancing is credit positive, enabling the company to improve future funding flexibility by reducing the secured debt in its capital structure and extending the maturity profile,” said the ratings agency.
Moody’s noted that Wynn Macau Ltd is a 72.2-percent owned subsidiary of Wynn Resorts Finance LLC, which in turn is a wholly-owned subsidiary of United States-based Wynn Resorts Ltd.
The further notes would not affect Wynn Resorts Finance’s ‘Ba3’ corporate family rating or its ‘negative’ outlook, because the exercise involved “largely debt for debt,” and was “leverage neutral,” said Moody’s.
The Wynn brand’s ‘Ba3’ corporate family rating reflected “the meaningful earnings declines from efforts to contain the coronavirus and the potential for a slow recovery now that properties have reopened,” said Moody’s referring latterly to U.S. operations.
Macau casinos had a 15-day pause in February, but since then Wynn Macau and Wynn Palace have been open, albeit with smaller numbers of customers, amid travel restrictions associated with the pandemic. Wynn Resorts operates venues in Las Vegas, Nevada, and Boston, Massachusetts.
The corporate family rating was “supported by the quality, popularity, and favourable reputation of the company’s resort properties – a factor that continues to distinguish Wynn from most other gaming operators,” said Moody’s.
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”Any reduction in [Macau gaming] tax would be positive for future profits and cash flows, all else equal”
DS Kim, Amanda Cheng and Livy Lyu
Analysts at brokerage JP Morgan Securities (Asia Pacific)