Fitch sees negative outlook for MGM and Sands

Lower visitations in Macau, Singapore and Las Vegas Casinos are injuring the financial position of the gaming giants.

Macau.- Ratings multinational Fitch has reaffirmed the BBB- rating of Las Vegas Sands and its subsidiaries, Marina Bay Sands and Sands China, but revised its outlook from “stable” to “negative”.  

This was due to lower visitation and continued travel restrictions in Macau, Singapore’s business being almost entirely restricted to local visitors, low visits to casinos in Las Vegas and “dim” prospects for business.

Fitch noted the imminent return of the individual visit scheme (IVS) in mainland China, but warned the resumption of visa issuance was conditional on coronavirus in Macau and on mainland remaining under control.

Fitch also stated that it is confident Las Vegas Sands “will take proper measures to maintain adequate liquidity, and allow leverage levels to promptly return.” Some of those measures involved pushing its Marina Bay Sands expansion back by about a year.

Regarding MGM Resorts International and its MGM China Holdings subsidiary, Fitch affirmed its ‘BB-‘ rating and gave their unsecured debt a ‘BB-/RR4’ rating, while their outlook was also classed as negative.

The firm believes the gaming giant has a “strong liquidity position to weather the challenging operating environment” and estimated it will return to financial thresholds by 2023.

But Fitch believes gaming locations such as Las Vegas Strip and Macau will continue to show a “challenging recovery trajectory as the coronavirus pandemic continues to hinder international and domestic tourism”.

Fitch ratings said: “The company was in a favorable liquidity position heading into the pandemic, having recently monetized Bellagio and MGM Grand vis-à-vis sale leaseback transactions, but it also took proactive steps to increase cash as operations halted.

“The negative rating outlook continues to reflect the risks and uncertainty the global gaming industry is facing from the pandemic. Fitch could revise the rating outlook to stable when there is a greater degree of confidence in the gaming industry’s recovery trajectory and MGM’s ability to de-lever back to 6.0x adjusted gross leverage.”