S&P Global Ratings has lowered its long-term issuer credit rating on Genting Berhad, due mainly to expectations of a slow recovery of Genting’s Malaysia, Singapore and Las Vegas gaming operations.
The ratings agency downgraded Genting to ‘BBB’ from ‘BBB+’ and Resorts World Las Vegas to ‘BBB-’ from ‘BBB’, noting also that Genting’s capital expenditure is likely to remain high in 2020 and 2021 resulting in elevated leverage.
“The COVID-19 pandemic is hitting the Genting group harder and longer than we anticipated. Several gloomy events have occurred since we revised the rating outlook on Genting to negative on March 11, 2020. These will translate into a weaker performance in 2020 and a longer recovery path than we expected,” said S&P in a note.
The analysts said they expect Resorts World Las Vegas to have a slower ramp up with Las Vegas to be one of the last gaming markets to recover in the U.S.
“We foresee structural changes that could alter the attractiveness of Las Vegas as a gaming destination in the next 24 months. Travel fears, restrictions, reduced airline capacity, and shrinking consumer pockets can put pressure on half of Las Vegas’ visitors who fly in by air. Businesses could also rethink on conventions, or prefer smaller group meetings or smaller budgets, affecting midweek demand.”
Genting Singapore’s shareholders recently approved a SGD302 million (US$212.8 million) aggregate final dividend for 2019, or 0.025 per share.