Macau Concessionaires’ Debt Reduction Slow Process, Says Fitch
Macau cassino operators should welfare from rising gross gaming revenue (GGR) as touristry to the gaming enclave from mainland mainland China increases, but the mental process of reducing debt could have a while.
That’s according to Fitch Ratings, which said more deferred payment upgrades for the concessionaires aren’t likely o'er the nigh term. Earlier this month, the ratings authority upgraded Sands mainland China parent Las Vegas Sands (NYSE: LVS) to “BBB-,” the lowest investment funds grade. Just days before that, Fitch reaffirmed Wynn Macau parent Wynn Resorts (NASDAQ: WYNN) at “BB-.”
The upswing inwards visitation and gaming revenue is likely to economic aid Fitch-rated casino operators with a presence inwards Macau inwards reducing their debt levels,” observed the research firm. “However, upside potentiality inwards their ratings is strained past their elevated purchase metrics, as deleveraging will read time for some of the operators, despite the improvements.”
The recent eight-day Chinese New Year holiday, which was a 24-hour interval yearner than usual, was a boon for Macau casino companies as visitation for that point reached 1.4 million, topping the 1.2 zillion seen in 2019, according to the Macao Government Tourism Office (MTGO).
Macau Debt a Necessary Evil
Macau operators were forced to submit on magnetic north of $20 one thousand million during the coronavirus pandemic simply to delay afloat as gaming venues inward the special administrative region (SAR) didn’t reopen in solemn until early 2023.
That delayed concessionaires’ power to get debt-reduction strides, but analysts and bondholders come out to live at repose with that because it’s widely expected the issuers will be able-bodied to hold a spate of maturities looming this year and in 2025.
Additionally, while Macau stocks remain sluggish, there’s strong appetence among worldwide bond paper investors for debt issued by Macau cassino operators, signaling that buyers believe nonremittal danger is minimum despite the high-yield grades on those bonds.
“We get along non escort substantial farther upside potentiality inwards the issuers’ ratings in the near term, as reflected by their Stable Outlooks,” added Fitch. “SJM Holdings’ purchase metric, inward particular, remains mellow and is likely to downfall to its rating thresholds only inward 2026, inward our view. There is also a risk of exposure that the retrieval inwards Macao’s gaming revenues could be slowed by possible policies to fasten majuscule efflux from the Chinese mainland.”
VIP Market Still Sluggish
The Macau retrieval has been led past mass and insurance premium mass players with VIP action mechanism stock-still tepid due to the fractured junket business.
The VIP segment, however, is on a slower path to recovery and unlikely to homecoming to pre-pandemic revenue levels inward the close future. This slower rebound in the VIP segment tin can live attributable to recent years’ regulatory tightening inwards China’s intervention of gaming touristry and the broader economical challenges cladding China,” concluded Fitch.
Recent data designate that in the fourth quarter, MGM China and Wynn Macau, which control a combined foursome venues there, gained market percentage piece leaders Galaxy Entertainment and Sands Red China ceded modest amounts of share.
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