Osaka IR faces funding hurdles
Some banks are reconsidering their commitments to Japan’s first integrated resort.
Japan.- Plans for Japan’s first integrated resort (IR) in Osaka were approved in April but the project reportedly faces difficulties that could further delay construction. MGM Resorts has already put the opening date back to the first half of 2030, but it appears some major lenders are hesitant about the project.
Concerns about gambling harm and public safety, risks of soil contamination and liquefaction on Yumeshima Island and the forced closures of international casinos amid the Covid-19 pandemic forcing casinos are apparently making it difficult to secure loans.
Sumitomo Mitsui Banking Corp. (SMBC) and MUFG Bank, based in Osaka, are expected to lead a syndicated loan of between JPY200bn (US$1.5bn) to JPY300bn (US$2.23bn) each. Resona Bank and SBI Shinsei Bank have expressed their willingness to participate in the project, while Sumitomo Mitsui Trust Bank and Development Bank of Japan have also discussed joining.
According to Asian Gaming Brief, arrangers have also reached out to smaller regional banks and life insurers to create a team of purely Japanese entities. However, Mizuho Bank, which is yet to respond, is absent from the list of expected participants.
MUFG and SMBC have adopted a project finance approach, banking on the debt being repaid from future income. Mizuho has opted for a more traditional corporate finance approach based on creditworthiness. If Mizuho backs out of the loans, other lenders will need to fill a funding gap of JPY100bn (US$740m).
