Genting Singapore to see little impact from expansion

According to Fitch Ratings, the expansion of Genting Singapore’s non-gaming attractions will have a modest impact on leverage and earnings.

Singapore.- The credit rating for Genting Singapore will remain unchanged despite a major expansion, Fitch Ratings said. The €2.9 billion process to improve non-gaming attractions will only have a modest impact on its leverage and earnings.

“Genting’s leverage will be higher than our previous expectations and the gaming tax in Singapore will increase in 2022 by about 3%,” they said. “However, Fitch believes that Genting has the liquidity, leverage and free cash flow capacity to fund the development within its current rating.”

Furthermore, opening the Resorts World Las Vegas in late 2020 will help them to return its leverage to about 1.0x. According to the firm, that’s commensurate with its A- rating.

“Foreigners comprise a larger share of GENS’s gaming revenue, and Fitch estimates that once in effect, the casino tax and casino entry levy will reduce GENS’s EBITDA by around 5%,” it said. “However, we expect the incremental revenue from the Singapore development to roughly offset the higher tax structure and the higher entrance fees planned for Singaporeans and permanent residents.”

“We have not factored in any additional investment with respect to GENS’s intent to bid for the integrated-resort project in Japan in our forecast amid the uncertainty over whether the project will go ahead,” Fitch explained.

“Any additional multibillion-dollar investments will likely delay Genting’s deleveraging trajectory, and may constrain its ability to deleverage to below 1.0x, the level at which Fitch would consider negative rating action.”