Macau casino operator Sands China Ltd’s “early repayment” of 2025 notes “could be aimed at achieving interest savings,” says a memo from Lucror Analytics, a Singapore-based specialist in credit research, carried on the Smartkarma platform.
Sands China said in a Friday filing to the Hong Kong Stock Exchange that it planned to exercise an option to redeem on June 11 the balance of its US$1.80-billion in senior unsecured notes due on August 8.
The 2025 notes – with US$1.63-billion in outstanding principal – consist of 5.125-percent registered senior notes issued on January 29, 2019.
The casino firm had said it planned to draw down a 2024 term loan facility – that has a lower interest structure than the 2025 notes – “and/or use its internal cash resources” to finance the redemption of the 2025 notes.
Lucror Analytics senior credit analyst Leonard Law stated in a Monday memo, referring latterly to the Hong Kong Interbank Offered Rate (HIBOR): “In our view, Sands China’s early repayment for the 2025 notes could be aimed at achieving interest savings, considering that the interest cost of the term loan (HIBOR +1.65 percent) is lower than the 2025 notes’ coupon (5.125 percent) as well as the interest cost from issuing new notes.”
Mr Law further noted: “The company’s next debt maturity will be the US$800-million Sands China Ltd 3.8 [percent notes]… due January 2026, which it could repay by issuing new notes or drawing down on the US$2.5-billion unsecured revolving credit facility (which bears an interest cost of HIBOR +2.5 percent).”
