Moody’s downgrades SJM debt

Moody’s has downgraded SJM Holdings’ corporate family rating to Ba3 from Ba2.

Macau.- Moody’s has cut SJM Holdings’ debt rating. The casino operator’s corporate family rating has been cut from Ba3 to Ba2. Both ratings are considered non-investment grade, with speculative elements and substantial credit risk.

Moody’s has also downgraded the backed senior unsecured ratings on bonds issued by an associated entity, Champion Path Holdings Ltd, that are guaranteed by SJM Holdings. They have been downgraded from B1 from Ba3.

“The downgrade is mainly driven by the slower recovery prospects for SJM’s gaming revenue during 2022-23 than we previously expected,” said Sean Hwang, Moody’s assistant vice president and analyst, in a press release on the rating change.

Hwang added: “The company’s continued cash burn in 2022 because of the persistently weak operating environment amid China’s enduring Covid-19 restrictions, and the expected gradual recovery starting only from 2023, suggest that SJM’s financial leverage will remain elevated over the next few years.”

He also said: “The rating review continues to reflect SJM’s weak liquidity because of the company’s delay in refinancing its loan maturity with long-term debt. SJM’s ratings are likely to be confirmed once the refinancing is completed.”

Moody’s has lowered its forecasts for the city’s mass-market casino gross gaming revenue in 2022 and 2023 to around 40 per cent and 80 per cent of 2019 levels, respectively.

See also: SJM Holdings could access US$637m loan from shareholder STDM