Moody’s assigns Ba3 rating to Melco Resorts’ proposed senior notes

Analysts cited a stable outlook and projected strong earnings.

Macau.- Moody’s Investors Services has assigned a Ba3 rating to the forthcoming senior unsecured US dollar notes issuance by Melco Resorts Finance. They expect the casino operator’s 2024 earnings to benefit from a “strong recovery” in the Macau market. 

Analysts expect a continued gaming market recovery in Macau to drive an increase in Melco Resorts’ adjusted earnings before interest, taxation, depreciation, and amortisation (EBITDA) “to around US$1.3bn in 2024, from US$0.9bn in 2023”. Increased free cash flow will also help the company further reduce its debt and leverage.

Melco Resorts Finance, a unit of Melco Resorts & Entertainment, is to issue US$750m in aggregate principal amount notes due in 2032. The notes will be priced at 7.625 per cent and net proceeds will be used to make a partial repayment of the principal amount outstanding under a revolving credit facility, together with accrued interest and associated costs. 

See also: Melco extends maturity date on US$1.92bn revolving credit facility

In March, Melco reported operating revenue of US$1.09bn for Q4, up 224 per cent in year-on-year terms. The increase was attributed to the improved performance in all gaming segments and non-gaming operations following the relaxation of Covid-19 countermeasures in Macau in January 2023 and the opening of Studio City Phase II.

The company reported an operating loss of US$94.4m, compared with an operating loss of US$199.5m in the fourth quarter of 2022. The group’s adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) was US$303.4m compared with negative US$6.8m.