S&P Global Ratings has affirmed the ‘B’ long-term issuer credit rating of Hong Kong-listed Cambodian casino operator NagaCorp Ltd. The rating agency changed NagaCorp’s outlook to ‘stable’, from ‘negative’, according to a Tuesday report.
NagaCorp is the operator of NagaWorld (pictured), a casino resort monopoly in the Cambodian capital Phnom Penh.
“The refinancing risk for NagaCorp has materially reduced, with the repayment of its outstanding senior unsecured notes in July 2024,” stated S&P Global.
“We believe NagaCorp will be prudent in how it manages its investment plans and shareholder returns,” it added.
The institution said however that NagaCorp’s gaming operations “are unlikely to recover to pre-Covid levels”.
“This is due to the elimination of Chinese junket operators. In 2019, Chinese junkets accounted for about 70 percent of gross gaming revenue,” it added. “The removal of Chinese junket operators and the pandemic has weighed on the business.”
S&P Global estimates that NagaCorp’s reported revenue and earnings before interest, taxation, depreciation, and amortisation (EBITDA) in 2025 “will be 38 percent to 42 percent and 53 percent to 57 percent of pre-Covid levels, respectively”.
The rating agency said the ‘stable’ outlook on NagaCorp reflected “the company’s steadily improving operational performance, entrenched position in the Cambodia gaming market, and our expectation that the company will manage funding requirements appropriately”.
In June NagaCorp drew down US$70 million of an US$80-million shareholder loan it received in October last year. That was in order to have sufficient liquidity to repay in full the group’s senior unsecured notes that were due in July. The total principal of the notes at issuance was US$472.2 million.
According to S&P Global’s estimate, NagaCorp has “a cash balance of US$80 million following the notes repayment”.
“We expect the company to manage future funding requirements and to prioritise its balance sheet for the time being,” said the institution.
“We believe the management will continue to strengthen its balance sheet and capital structure over business expansion. This was apparent in the extension of the completion date for Naga 3 – by four years – to September 2029,” it added.
