KUALA LUMPUR, July 3 — Fitch Ratings reportedly said that Genting Malaysia Bhd subsidiary Genting New York LLC may face stiff competition in its bid for a full-scale casino licence in New York.
Genting New York may bid for the licence, the credit rating agency said in its commentary last Thursday, according to a report from The Edge.
“We think the process for the award of three downstate licences, likely to be completed by 1H2024 (first half of 2024), will face intense competition among various operators, and Fitch has not yet factored it in Genting’s forecasts due to significant uncertainty,” it was quoted as saying.
Besides that, it reportedly said Genting Bhd’s takings are expected to hit 85 to 95 per cent of its 2019 levels within this year.
It is also expected to reach levels seen before the Covid-19 pandemic in the second half of next year, Fitch reportedly added.
The number of visitors rebounded after pandemic restrictions were eased in April 2022 in the group’s key assets in Malaysia and Singapore, which provided more than 60 per cent of its total earnings before interest, taxes, depreciation, and amortisation (Ebitda), Fitch reportedly said.
It reportedly added that the reduction of the group’s workforce in Malaysia should offset wage inflation and ensure earnings before interest, taxes, depreciation, amortisation, and restructuring or rent costs (Ebitdar) margins to improve over levels in 2019.
“However, the Singapore Ebitdar margin is unlikely to recover to pre-pandemic levels in the next three years due to the gaming tax increase from 2Q2022,” it was quoted as saying.
Its estimations of Genting’s net leverage, based the proportionate consolidation of its three listed subsidiaries (Genting Malaysia, Genting Singapore Limited and Genting Plantations Berhad) and associate Genting Empire Resorts LLC, is projected to wane from 4.1x to 3.5x this year and following that, decline further.
Meanwhile, Fitch reportedly went on to assign ‘BBB-’ ratings to Resorts World Las Vegas LLC’s (RWLV) senior secured loan and revolver facilities.
“The term-loan and revolver facilities are secured by substantially all of RWLV’s existing assets.
“The proceeds from the secured facilities will be mainly used to refinance a majority of the US$1.25 billion (RM5.8 billion) senior secured debt outstanding as of 1Q2023,” it was quoted as saying.
Genting has a ‘high’ strategic incentive to support RWLV because of the financial contribution and competitive advantage it can provide to the former, Fitch reportedly added.
“We expect RWLV, which is one of Genting’s three flagship assets, to contribute over 20 per cent of Genting’s proportionately consolidated Ebitdar from 2024.
“The ‘medium’ operational incentive is driven by the sharing of the Resorts World brand and integrated management decision-making, despite limited operational synergies as Genting’s casinos operate independently.
“The legal incentive is ‘low’ as there are no guarantees and cross-default clauses,” it was quoted as saying.
