There is more to come: Moody’s expects MGM, Wynn to hunt large IR development
Moody’s expects MGM Resorts and Wynn Resorts to pursue new “large, high profile” development opportunities, which would require “significant” investment and debt.
MGM Resorts is the parent of Macau casino operator MGM China Holdings Ltd
The ratings agency said it expected MGM Resorts to “actively pursue other large integrated resort development projects that would require significant equity investment and debt to finance construction and will continue to expand its domestic operations.”
MGM Resorts and its local partner Orix remain the only qualified consortium in the request-for-proposal process of Osaka prefecture, concerning the metropolis’ tilt at having a casino resort.
In Wednesday’s announcement, Moody’s said MGM Resorts’ “Ba3” corporate family rating reflected the group’s “meaningful earnings weakness expected from efforts to contain the coronavirus and the slow recovery in volume now that properties have reopened”.
According to Moody’s definitions, “Ba” credit obligations have “speculative elements and are subject to substantial credit risk”.
The ratings house suggested MGM Resorts was “constrained by its concentration” in Las Vegas. In the Macau market, there was some “volatility” of demand and dependence on inbound travel rather than a locals market, with such demand “curtailed” during the pandemic.
“As a result of a slow expected recovery in Las Vegas and Macau, MGM is weakly positioned at the Ba3 level, as leverage is expected to remain elevated for at least next year,” stated Moody’s.
Regarding Wynn Resorts, Moody’s said it also expected the group to be “presented with and pursue other large, high profile, IR development opportunities around the world.” The rating agency did not elaborate on what other markets could be of interest to Wynn Resorts.
But it added: “There will likely be periods where the company’s leverage experiences periods of increases due to partially debt-financed, future development projects.”
Moody’s said additionally that Wynn Resorts Finance LLC’s “Ba3” corporate family rating reflected the “meaningful earnings declines from efforts to contain the coronavirus and the potential for a slow recovery now that properties have reopened.”
Editing by Rachel Hu
