Moody’s Ratings said in a Monday note that it doesn’t expect complaints against Malaysian gaming giant Genting Berhad and subsidiaries in Las Vegas and the Bahamas to impact the company financially, however the potential investment required should it win a full New York casino license could affect credit metrics.
The complaints include a regulatory complaint issued by the Nevada Gaming Control Board in August for allegedly allowing individuals with suspected or proven ties to illegal activities to gamble at Resorts World Las Vegas. Genting Malaysia is also being sued for more than US$600 million by a key partner over allegations it has been dumping group liabilities onto its Resorts World Bimini (RWB) property in the Bahamas.
Moody’s which on Monday affirmed the Baa2 issuer ratings of Genting Berhad (GENB) and Genting Overseas Holdings Limited (GOHL) and the A3 issuer rating of Genting Singapore Limited (GENS), said its “base expectations are that these complaints should not result in significant financial damages and disruptions to operations.”
According to Moody’s Ratings analyst Yu Sheng Tay, the ratings affirmation “reflects our expectation of stable operating performance and cash flow generation, supported by the group’s diversified gaming operations and strong market positions in Singapore and Malaysia.”
With geographically diversified gaming operations across Asia, Europe and the Americas, including monopoly market positions in Singapore and Malaysia, non-gaming businesses including its energy and plantation segments which provide some earnings diversification, the ratings agency said it expects Genting Berhad’s “Moody’s-adjusted EBITDA” to rise by around 4% to 5% annually in 2024 and 2025, from MYR10 billion (US$2.29 billion) in 2023.
Leverage is also seen improving from 4.1x at end-2023 to around 3.9x over the next 12 months.
However, the ratings agency said there is limited buffer in Genting Berhad’s credit metrics to absorb a sustained increase in debt.
“Genting Berhad has high capital spending amid ongoing expansion works at its Singapore operations and investments in its energy businesses,” it said. “We project its consolidated capital spending will rise to MYR6 billion to MYR7 billion (US$1.4 billion to US$1.6 billion) per annum in 2024 and 2025, from MYR2.8 billion (US$642 million) in 2023.
“Our capex projections do not take into account investments associated with a New York license win as it ultimately hinges on the awarding of the license, which remains uncertain at this point. Genting Berhad’s indirect subsidiary Genting New York LLC plans to apply for one of three casino licenses in downstate New York. The company has outlined an investment of US$1.1 billion by the end of 2026 and an additional US$2.9 billion by 2030 if its application is successful.”
New investment aside, Moody’s described the company’s standalone liquidity as “excellent”, supported by fees and dividend income from its operating subsidiaries and a well-managed debt maturity profile.
“The stable outlook reflects our expectation of sustained growth in earnings and cash flows across the company’s business segments over the next 12 to 18 months,” Moody’s said. “At the same time, the outlook incorporates our view that its credit metrics will improve in the absence of debt-funded expansion projects.”
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