S&P affirms SkyCity BBB- rating
Analysts have maintained a stable outlook.
New Zealand.- S&P Global Ratings has maintained SkyCity Entertainment Group’s BBB- long-term issuer credit rating and BBB- long-term issue ratings on the company’s debt. It forecasts that credit metrics will weaken in fiscal years 2024 and 2025 but will stay within the tolerances of the current ratings.
It said: “The stable outlook reflects our view that SkyCity is taking creditor-friendly actions to avoid downward pressure on the rating by prioritizing debt reduction over the next two fiscal years.”
S&P adjusted its earnings forecast for SkyCity downwards, noting subdued economic conditions in New Zealand leading to decreased revenues in both gaming and non-gaming sectors. The debt-to-EBITDA ratio is expected to peak at 2.9x in fiscal 2024s, with proactive debt reduction measures anticipated to improve the ratio to 2.0x by fiscal 2026.
S&P noted measures including holding off on paying dividends until 2025 and using the sale of a stake in Gaming Innovation Group (GiG) to pay off debts. It expects SkyCity’s earnings to improve from fiscal 2026 amid an economic recovery in New Zealand and increased earnings potential from operations like NZICC, Horizon Hotel and car parks.
