Moody’s puts NagaCorp’s ratings under review for downgrade

NagaCorp reported GGR of US$445.9m for 2022.
NagaCorp reported GGR of US$445.9m for 2022.

Moody’s says it may change its outlook to negative due to NagaCorp’s US$472m bond due in July 2024.

Cambodia.- NagaCorp has been placed on review for a possible downgrade by Moody’s Investors Service. Its B2 corporate family rating and senior unsecured rating could change due to “heightened refinancing risks” owing to a US$472m bond due in July 2024 and “tight funding conditions”.

Moody’s said: “The bond is the company’s only debt in its capital structure, excluding lease liabilities. NagaCorp also has limited sources of liquidity given its lack of bank facilities and divestible non-core assets.”

Moody’s has reported that NagaCorp’s anticipated operating cash flows, which are estimated to be approximately US$535m until June 2024, are insufficient to cover the company’s cash uses, including bond maturity and discretionary expenses such as dividends and development capital expenditure. 

It says the company may decrease or delay its discretionary spending to boost liquidity and repay the bond using internal cash flows. However, Moody’s expects NagaCorp to continue investing in capital expenditure for its Naga 3 expansion project.

Last November, the company repurchased some of its senior notes due to mature in July 2024 and brought down the outstanding principal amount to US$472.2m.

See also: Analysts expect NagaCorp may have to refinance 2024 bonds

For full-year 2022, Nagacorp’s gross gaming revenue (GGR) grew from US$223.5m in 2021 to US$445.9m. Earnings before interest, tax, depreciation and amortization (EBITDA) reached US$245.4m and net profit US$107.3m.

The company noted that the results were mainly driven by the mass market segment. GGR for mass market tables was US$203.8m, up from US$66.5m in the previous year. GGR for mass-market electronic gaming machines was US$124.3m while the premium market generated GGR of US$91.4m.

NagaCorp said the recovery was fueled by the gradual recovery of Cambodia tourism and visitation to the property in line with the easing of travel restrictions regionally. In 2022, Cambodia received 2.28 million international tourists.

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