Moody’s Investors Service has changed to ‘stable’ from ‘negative’ the outlook on Macau casino operator Wynn Macau Ltd, and also upgraded the company’s senior unsecured notes rating to ‘B1’ from ‘B2’.
Wynn Macau Ltd operates the Wynn Palace resort (pictured) on Cotai, and the Wynn Macau resort on the city’s peninsula.
The company is a 72.2-percent owned subsidiary of Wynn Resorts Finance LLC, which in turn is a wholly-owned subsidiary of U.S.-based casino developer Wynn Resorts Ltd.
In its Monday memo, Moody’s also affirmed Wynn Resorts Finance’s ‘B1’ corporate family rating, and existing ‘Ba1’ senior secured revolver and term loan ratings. Wynn Resorts Finance’s outlook was also changed to ‘stable’.
Wynn Resorts Finance credit profile “reflects the improving performance of the company’s Macau operations as the recovery continues, and the continued strong performance of the company’s U.S. operations, driving leverage down from elevated levels,” wrote Moody’s senior analyst, Adam McLaren, and associate managing director, Luisa De Gaetano.
The upgrade to the company’s senior unsecured notes suggests “a reduction in total debt levels as well as the change in the relative mix of secured versus unsecured debt in the company’s capital structure”.
The ratings agency said: “The expected recovery in Macau, coupled with the strong performance at the company’s Las Vegas and Encore Boston Harbor properties will support revenue and EBITDA [earnings before interest, taxation, depreciation and amortisation] growth and drive leverage down.”
It added: “The stable outlook incorporates our view that the company will maintain good liquidity, with ample cash balances.”
According to the institution, the Wynn group’s revenue and cash flow “will remain heavily concentrated in the Macau gaming market”.
Moody’s expects that the casino operator “will be presented with and pursue other large, high profile” casino resort development opportunities, such as its development in the United Arab Emirates.
“As a result, there will likely be periods where the company’s leverage increases due to partially debt-financed, future development projects,” stated the institution.
Moody’s expects gaming revenues for Wynn to “continue to ramp in 2024,” enabling the group “to restore credit metrics” to levels in line with the ‘B1’ rating.
“Ratings could be upgraded if debt/EBITDA on a Moody’s adjusted basis is maintained below 6.0 times,” added the ratings agency. “Good liquidity and continued revenue growth with strong positive free cash flow would also be needed for an upgrade.”
Earlier this month, Moody’s changed the outlook on the Macau government to ‘negative from ‘stable’, while keeping the region’s foreign currency issuer ratings at “Aa3”, indicating a very low credit risk of default.
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