Moody’s assigns stable outlook to Melco units

Analysts forecast earnings recovery and improved financial leverage.

Macau.-Moody’s Investors Services has assigned a stable outlook to Melco Resorts Finance and Studio City Finance. It expects improved earnings and finances over the next 12 to 18 months.

Analysts expect that Studio City Finance, associated with the Studio City casino complex in Macau, will not pay dividends for the next one to two years because the company has high leverage due to debt acquired to support capital spending following the Covid-19 pandemic.

Moody’s gave Melco Resorts Finance a Ba3 corporate family rating and expects the company’s adjusted EBITDA to improve 5.2x to 6.2x over the next 12 to 18 months from 8.6x in 2023. It gave Studio City Finance B1 corporate family rating and expects adjusted debt/EBITDA to improve to 6x-7x over the next 12-18 months.

See also: Melco Resorts buys back shares

Melco Resorts & Entertainment Limited reported operating revenue of US$1.16bn for the second quarter of the year, up 22 per cent in year-on-year terms. The increase was attributed to improved performance in the mass market segment and non-gaming operations driven by the recovery in inbound tourism to Macau.