Moody’s to review SJM Holdings’ rating after refinancing delay

SJM has suffered a delay in its refinancing.
SJM has suffered a delay in its refinancing.

Moody’s Investors Service has announced it will review SJM Holdings’ rating for a downgrade.

Macau.- SJM Holdings Limited has been placed on review for downgrade by Moody’s Investors Service mainly due to a delay in refinancing its existing bank loans, which will mature at the end of February 2022.

Moody’s will review SJM Holdings Limited’s Ba1 corporate family rating (CFR) and the Ba2 backed senior unsecured rating on the bond issued by Champion Path Holdings Limited and guaranteed by SJM Holdings Limited.

Sean Hwang, Moody’s assistant vice president and analyst, said: “While SJM’s solid credit quality and long-standing banking relationships support its ability to raise necessary funds, its funding plan is subject to certain regulatory processes and capital market uncertainties.”

SJM Holdings started to refinance the secured bank financing due in February 2022 in early 2021. In the first half of the year, it raised HK$9.3bn (US$1.2 bn) in unsecured bonds and reduced the balance of existing financing from HK$19bn at the end of 2020 to HK$9bn at the end of June 2021. 

SJM is seeking to refinance the remaining balance through new syndicated bank financing. However, Moody’s believes the implementation of such facilities is subject to certain regulatory procedures, which can sometimes be unpredictable. 

Further delays would force SJM to switch to other financing channels, such as bond issuance, which has a limited buffer for the upcoming maturity date. This situation could expose SJM to uncertain capital market conditions.

However, Moody’s believes that “SJM’s established track record of gaming operations and quality assets in Macau”, as well as its long-term banking relationship, will help to obtain sufficient bank financing or bond income for refinancing. 

If SJM fails to make sufficient progress on the maturity of bank loans in the next three months or so, Moody’s will downgrade its rating, possibly by multiple ratings.

SJM Holdings posts US$188.5m net loss for H1

SJM Holdings has reported that revenue in the first six months of the year was up 19 per cent year-on-year to HKD5.22bn.

Adjusted EBITDA came in at HKD510m in the second quarter with a negative margin of 9.8 per cent, compared with a negative 22.5 per cent from the previous year period, while net losses reached HKD1.47bn (US$ 188.5m).

The company said that despite the Covid-19 pandemic, “certain results showed improvement in comparison with the first half of 2020.”

Net gaming revenue was up 18.8 per cent year-on-year to HKD5.08bn while mass-market table GGR was up 33.2 per cent to HKD4.39bn. VIP gross revenue for the first half stood at HKD855.6m, down 37.5 per cent, while revenue from slot machines was up 12.7 per cent year-on-year to HKD264.6m.

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