Genting gets negative rating after new Covid-19 restrictions

Genting Bhd has been rated negatively by Moody’s due to new restrictions in Malaysia.

Malaysia.- Moody’s Investors Service has ranked Genting Bhd as negative due to the “deteriorating situation” in Malaysia regarding Covid-19.

It has given the casino operator a Baa2 negative qualification, which means a moderate credit risk for the parent company of several casino businesses around the world.

Analysts Junling Tan, Yu Sheng Tay and Vikas Halan said the outlook in Malaysia “could derail earnings recovery and exacerbate [Genting Bhd’s] already-weak credit metrics”.

Resorts World Genting has reduced its operating capacity due to a new movement control order mandated by the Malaysian government to contain the spread of the Covid-19.

Moody’s said: “A delay in recovery in the Malaysian leisure and hospitality segment, which contributes around 34 per cent of Genting Bhd’s consolidated EBITDA could lead to leverage increasing to around 7.3 times in 2021.

“We expect that Resorts World Genting will receive less visitors because of travel restrictions, social distancing and density control measures, as well as health and safety concerns”.

However, the ratings agency said Genting will have “excellent consolidated liquidity”, with MYR29bn (US$7.19bn) in cash and equivalents, and gross balance sheet debt of MYR38bn as of September 30, to “support its ability to weather the temporary deterioration of earnings”.

It concluded: “Genting Bhd’s operating cash flow of around MYR4.5 billion over the next 15 months will be sufficient to cover an estimated capital spending and investment of around MYR13 billion and an estimated dividend payout of around MYR2.6 billion.”