KUALA LUMPUR (Sept 19): International credit rating agency S&P Global Rating said that the bid for a Macao gaming licence could shift Genting Bhd group’s focus to debt-funded growth, from the rating agency’s earlier expectation that the group is deleveraging.
In a report on Sept 19, S&P Global Ratings stated that if the group managed to secure the Macao gaming licence, the group might shift its focus from one that is deleveraging, to one fuelled with debt, which could then change the rating agency’s expectation on the group’s credit quality.
“This is contrary to our earlier expectation that Genting's (BBB-/Stable/--) credit quality will stabilise following the completion of a major investment cycle, while an operational recovery is underway,” the rating agency stated in the report.
On Sept 14, Genting Malaysia Bhd's indirect subsidiary GMM SA submitted a bid to the Macao Special Administrative Region’s government for a 10-year licence to operate casinos. Genting Malaysia is one of the main hospitality, gaming, and entertainment arms of Genting, with the latter owning a 49.35% stake in Genting Malaysia.
Aside from the Macau government conditionally accepting GMM's proposal, no further details are available currently.
“Despite offering a wider geographic footprint and an opportunity for the group to expand, Macao's gaming market would also imply more intense competition in a highly regulated and scrutinised market versus other markets, such as Malaysia and Singapore.
“We expect the outcome of the bid to be released by year end,” S&P Global Ratings said.
S&P Global Ratings-rated Macau gaming companies, Las Vegas Sands Corp (BB+/Watch Neg/--), Melco Resorts (Macau) Ltd (BB-/Watch Neg/--), and MGM Resorts International (B+/Watch Neg/--) are currently on CreditWatch with negative implications due to stringent Covid restrictions clouding the path to recovery.
“We expect Macao's 2022 gross gaming revenue (GGR) to only be 20% to 30% of 2019 level, and 50% to 70% in 2023. Furthermore, we view the timeline of the mass market recovery to be uncertain due to the ongoing Covid situation and macroeconomic difficulties in China,” the rating agency added.