Analysts at Moody’s Investors Service have downgraded MGM Resorts International’s corporate family rating from Ba3 to B1.
Macau.- Moody’s Investor Services has downgraded the corporate family rating of MGM Resorts International due to a slower economic recovery in Macau and the company’s likely high debt levels. The decision includes a downgrade in MGM’s Probability of Default Rating from Ba3-PD to B1-PD and a downgrade of the company’s senior unsecured debt from Ba3 to B1.
MGM China Holdings Ltd’s senior unsecured debt was also downgraded from Ba3 to B1. However, despite a slower than expected recovery in Macau, analysts noted a strong recovery in the company’s regional and Las Vegas operations and expect earnings from these to remain in line with its benchmark economic guidance.
Moody’s said: “The downgrade reflects the slow recovery in Macau and the high leverage level the company is expected to carry following a number of deals completed or to be completed soon.”
MGM China net revenue up 84% in 2021
MGM China has reported HKD9.41bn (US$1.2bn) in net revenues for 2021. That represents an increase of 84 per cent compared to the prior year but a decrease of 58 per cent when compared to 2019.
The casino operator reported a positive adjusted property performance of US$389.8m, an improvement from a US$1.3bn property loss the previous year. Despite the improvement, that’s still 97 per cent lower than pre-pandemic levels.
Meanwhile, the casino operator has confirmed that it followed the majority of Macau casino operators in ceasing all junket arrangements in December.
The company said: “We have focused our business on main floor gaming operations and, accordingly, we do not expect VIP gaming operations to be a significant source of revenue in future years.
“The majority of MGM China’s casino revenue has been provided by main floor gaming operations in recent years and we expect this customer base will be the primary source of growth in the future.”