Moody’s tags NagaCorp project as “credit negative”

The company recently announced a new US$350mnon-gaming resort to be built in Angkor Wat, Siem Reap.

Cambodia.- Moody’s has graded as “credit negative” the new non-gaming resort NagaCorp plans to build at Angkor Wat in Cambodia.

The US$350m project will be developed in 75 hectares just 500 metres south of the outer restricted zone of Angkor Wat in Siem Reap, where the company has obtained a 50-year lease from the Cambodian government.

The credit agency said: “The company’s capital spending plans will reduce its liquidity buffer, while the coronavirus pandemic has weakened the economic environment and made the pace of recovery uncertain for the gaming industry.”

The agency took into account that the operator is already committed to other major projects, including the phase 3 expansion of NagaWorld, which will be funded by its chief executive, Chen Lip Keong.

The other is a US$300m casino and hotel complex in far eastern Russia scheduled to open in 2022.

The non-gaming facilities at Siem Reap, provisionally named Angkor Lake of Wonder, are being designed by two architectural firms, US-based Steelman Partners and Gensler.

The project may include three hotels, a Naga Water World park, an indoor digital theme park, a non-motorised boating canal system, MICE facilities, and a “China Town” food street.

Moody’s stated: “The company has capacity for additional debt to fund its capital spending plans because of its low leverage.” The agency is also expecting a “recovery in operating conditions and repayment of the company’s senior unsecured notes due May 2021.”

According to the note, in the third quarter of 2020, NagaCorp reported gaming revenue of US$238 million, down 43 per cent year-on-year but a sequential improvement.

Moody’s observed: “We also expect that NagaCorp will generate sufficient cash flows over the next five years to meet its capital spending plans of around US$4 billion without relying on debt. However, NagaCorp’s stated dividend payout ratio of 60 per cent, if paid, will pressure the company’s liquidity.”

Moody’s has already rated NagaCorp with a B1 negative rating and a negative outlook since April.