Fitch puts Universal Entertainment on negative watch

It cited concerns over debt refinancing.

The Philippines.- Fitch Ratings has given Universal Entertainment (UE) a ‘B-‘ Long-Term Issuer Default Rating (IDR) and a ‘B-‘ rating on its outstanding US-dollar senior secured notes, now on rating watch negative (RWN). It made the move due to the fact that the maturity of US$760m in notes, which makes up most of the company’s debt, in December 2024.

Although the company is in advanced stages of a closing a refinancing plan, there are no legally binding commitment in place. Fitch said it would resolve the rating watch negative if the company successfully refinances its debt while any delays “will likely lead to further negative actions.”

“While our analysis suggests that all the debt instruments would be fully recovered, we note that a significant amount of UE’s enterprise value (EV) is tied to assets located in the Philippines. Therefore, the country cap for the Philippines will be applied, which limits the Recovery Rating to ‘RR4’ as per Fitch’s Country Specific Treatment of Recovery Ratings Criteria,” it said.

Fitch forecast that after a strong 2023 performance, UE’s revenue growth will level off in 2024 before rising from 2025 at a moderate rate. Analysts have revised down their revenue forecast for the company’s IR in the Philippines despite their positive outlook based on the country’s strong economic growth and increasing visitor numbers.

UE’s IR revenue declined quarter over quarter in Q4 and Q1 due to weaker performance in the VIP segment. UE recorded net sales of JPY34.4bn (US$220m) for the first quarter of the year. That’s a decline of 3 per cent when compared to last year.

See also: TRLEI posts gross gaming revenue of US$154m for Q1