Moody’s Ratings has upgraded the outlook for NagaCorp, operator of Cambodian integrated resort NagaWorld in Phnom Penh, from negative to stable after the company confirmed last week it now has sufficient liquidity to fully address its $472 million US dollar bond maturing on 6 July 2024.
In a note, Moody’s said the change in outlook was because “refinancing risk has abated as NagaCorp has sufficient funds to repay its US dollar bond in July” after drawing down a US$70 million loan from an entity controlled by its majority shareholder, the Chen family.
“Liquidity has improved over the past 12 months, helped by the drawdown … and reduction in discretionary spending,” explained Moody’s analyst Yu Sheng Tay.
“The improved liquidity also reflects the company’s efforts to accumulate cash since 2022 by reducing development capital expenditure and declaring scrip dividends in lieu of cash.”
Following the maturity of its US dollar bond in July, Moody’s said it estimates NagaCorp will have total debt of around US$120 million including lease liabilities, while EBITDA from its IR operations will improve to between US$320 million and US$370 million over the next 18 months, up from US$295 million in 2023 as the tourism sector in Cambodia gradually recovers.
However, this still remains at just 60% of 2019 levels, impacted by the “structural shift for gaming operators in the region” following collapse of the Chinese junket industry.
“At the same time, the company remains exposed to competition from other Asian gaming destinations,” Moody’s added, indicating a “slower recovery trajectory compared with its peers in the region.”
RelatedPosts
