Moody’s Investors Service Inc said in a memo it had assigned a ‘B1’ rating to Wynn Macau Ltd’s US$750-million in senior unsecured notes, adding the exercise would aid the casino firm achieve a two-year-plus buffer on a “cash burn” basis during the Covid-19 crisis.
The Macau casino-operating entity of United States-based Wynn Resorts Ltd had announced on Thursday – in a Hong Kong filing and business update amid the pandemic – the idea of the note offer, but only gave further details on Sunday, stating that the move involved US$5.500-percent notes due in 2026.
Wynn Macau Ltd runs Wynn Macau on the city’s peninsula, and Wynn Palace in the Cotai casino district.
“The additional liquidity is beneficial as it further improves the company’s liquidity profile and runway in Macau to over two years on a cash-burn basis as they [Wynn Macau Ltd’s leadership] manage the current weak operating environment, including reduced visitation levels in Macau,” stated Moody’s.
Wynn Macau Ltd has said that the proceeds from the senior unsecured notes would be used for general corporate purposes “until business recovers from the effects of the coronavirus,” and then to facilitate the repayment of a portion of the amounts outstanding under the group’s existing credit facilities.
Moody’s stated: “Although there is an initial increase in leverage on a gross basis, the transaction enables the company to reduce the secured debt in its capital structure once business conditions improve.”
Wynn Macau Ltd is controlled by the parent company via Wynn Resorts Finance LLC. The credit rating agency said Wynn Resorts Finance had a ‘Ba3’ corporate family rating, which remained unchanged.
Moody’s said that the Wynn group family rating reflected “the meaningful earnings decline over the next few months expected from efforts to contain the coronavirus and the potential for a slow recovery once properties reopen.”
Wynn group’s corporate rating was supported by the group’s “high-quality destination resorts,” as well as “good liquidity and relatively low cost of debt capital,” said the ratings agency.
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