KUALA LUMPUR (Oct 1): Fitch Ratings has affirmed the "BBB" issuer default ratings (IDRs) of Genting Bhd, Genting Malaysia Bhd (GenM), Resorts World Las Vegas LLC (RWLV) and Genting Overseas Holdings Ltd (GOHL), and affirmed the "BBB-" IDR of Genting New York LLC (GenNY).

The outlook on the IDRs, however, is negative, said Fitch in a statement on Thursday.

Fitch also affirmed senior unsecured debt of Genting, GenM, RWLV, and GOHL at "BBB" and GenNY at "BBB-".

“The affirmation considers Fitch's revised recovery projections and our view that Genting remains on track to reduce leverage to around four times in 2022 and three times in 2023, from six times in 2021.

“We believe that Genting will maintain a profile commensurate with its 'BBB' rating even though its primary operating markets are not likely to fully recover to pre-pandemic levels until 2023-2024. This is supported by vaccination progress and reopening plans in Singapore and Malaysia, recovery in the US and moderating capex (capital expenditure),” said Fitch.

According to Fitch, Genting's "BBB" also reflects its position as the sole casino licence holder in Malaysia, robust share in Singapore's duopolistic market, track record of prudent balance sheets and timely capex executions.

Meanwhile, Fitch said, the negative outlook incorporates near-term uncertainty around the transition into normalcy when Covid-19 is deemed endemic.

“We believe the next six to nine months are critical for the sector as governments decide whether casino and tourism operations can gradually return to normal or if cross-border travel restrictions will be retained for the long term,” it said.

Fitch does not expect strict lockdowns given the high vaccination rates, in line with government policies in Genting's key markets.

“Therefore, we may revise the outlook to stable in the next six to nine months if Genting builds a longer track record of operational stability, and demonstrates it is able to deleverage in line with our expectations,” it said.

It also said tighter social distancing measures pose a risk to Genting's pace of recovery and deleveraging.

“The risk is more pronounced as Genting has just completed a high-capex cycle, which left the company with high debt,” it said.

At 10.15am on Friday, Genting was traded at RM5, valuing it at RM19.38 billion.