Macau Casino Operators Can Handle Debt Maturities

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Posted on: February 4, 2024, 08:02h. 

Last updated on: February 5, 2024, 01:48h.

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During nan worst days of nan coronavirus pandemic, Macau casino concessionaires took connected monolithic amounts of indebtedness simply to enactment afloat. Tabs for immoderate of those obligations are coming due, but those maturities are improbable to load issuers.

SJM Resorts Grand Lisboa casino MacauAn aerial position of nan Grand Lisboa successful downtown Macau. Casino operators location tin grip upcoming indebtedness maturities. (Image: Xinhua)

The expertise to work firm bonds, galore of which were issued pinch junk grades, and thus, precocious liking rates, is applicable to Macau operators and bondholders alike. That’s because, arsenic noted by S&P Global Ratings, rated issuers person 5% to 27% of their bonds coming owed this twelvemonth and successful 2025.

Issuers will apt push backmost refinancing plans arsenic overmuch arsenic imaginable for 2025 maturities to little nan costs of debt, fixed nan elevated U.S. dollar liking rates and improving free rate travel procreation successful Macao. Issuers could partially salary down these maturities pinch a communal target to little leverage,” according to nan investigation firm.

S&P added that MGM China and Wynn Macau person nan rate connected manus and entree to revolving in installments needed to return attraction of 2024 maturities without refinancing. It’s communal for companies to refinance indebtedness to push retired maturities. But it’s much desirable to thin to those obligations without pursuing maturity extensions.

Creditors Likely to Support Operators

It was bully business for banks to indebtedness superior to Macau casino operators successful 2021 and 2022, erstwhile gaming venues successful nan typical administrative region (SAR) were hardly unfastened for business.

After all, finance banks bid fees connected firm enslaved sales, and by providing superior to operators during a unsmooth patch, the financial institutions made de facto wagers connected Macau’s betterment — bets that are paying disconnected today.

“While immoderate of these 2025 maturities will go existent indebtedness successful nan adjacent 2 quarters, we judge issuers person capable rate resources to prolong their liquidity positions,” noted S&P. “We besides expect issuers to get incremental support from their banks, fixed nan market’s beardown recovery. These banks supported nan issuers moreover done nan difficult pandemic period.”

Encouraging Signs for Macau Casino Operators’ Debt

In aggregate, nan six concessionaires took connected much than $20 cardinal successful caller indebtedness owed to nan COVID-19 crisis. But resurgent free rate travel to equity levels are dampening risks associated pinch elevated levels of outstanding obligations. Plus, marketplace participants are bullish connected Macau gaming bonds, signaling that nan plus people is among nan astir preferred erstwhile it comes to China-linked high-yield debt.

Additionally, in installments ratings and outlooks for immoderate Macau operators, including Sands China and Wynn Macau, are decent. That duo combines to tally 7 integrated resorts successful nan gaming enclave.

“Ongoing betterment [and] nan companies’ rate travel successful Macau has aided betterment successful leverage. It will besides supply nan 2 companies pinch financial cushion to sorb a imaginable large[1]scale, multi-year casino task if they unafraid 1 of nan New York licenses,” concluded S&P.

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