S&P Global Ratings has revised the outlook for Genting Group companies to negative, warning that incremental earnings are unlikely to keep pace with spending over the next five years due to high-cost expansion projects in New York and Singapore.
While the agency has affirmed the issuer and issue credit ratings for group entities Genting Bhd, Genting Malaysia Bhd, Genting New York LLC and Resorts World Las Vegas LLC, it added that a ratings downgrade could also be on the cards given its high capital expenditure and growth priorities.
In a Wednesday note, S&P observed that several Genting subsidiaries will undertake heavy investments over the coming years period, including Genting New York LLC’s spending after it secured a full gaming New York license, Genting Singapore’s Resorts World Sentosa expansion and Genting Energy Ltd’s investments in a floating liquefied natural gas facility.
Parent Genting Berhad has also invested heavily to increase its stake in Genting Malaysia – which oversees the New York project – from below 50% to almost 74%.
As such, “We estimate the group’s total capex in 2026 will be double the MYR6 billion (US$1.47 billion) in 2025, and much higher than the MYR4.3 billion (US$1.05 billion) in 2024,” the agency said, adding that spending related to the New York license facility will on average account for close to 30% of the group’s total annual capex over the next two to three years “We expect capex to remain above MYR8 billion (US$1.96 billion) annually through 2030.”
Noting that incremental earnings are unlikely to keep pace with spending, S&P said, “We estimate the average run-rate EBITDA from the New York license will exceed US$400 million annually. Meanwhile, the FLNG facility is unlikely to generate cash flows until mid-2027 at the earliest.
“Earnings in Singapore should continue to recover following business disruptions at its brownfield facilities; however, the large investments will run down the company’s cash buffer.
“Given the high spending, we expect Genting Bhd.’s discretionary cash flow to remain negative over the next three years. This will cause the group’s reported debt to rise toward MYR35 billion (US$8.57 billion) by 2028, from MYR21 billion (US$5.14 billion) in 2024. As such, Genting Bhd’s leverage (ratio of funds from operations FFO to debt) could fall below 20% through 2027.”
S&P points to what it calls an “increased risk appetite” by Genting Bhd, as seen by its sudden move to acquire a significantly larger stake in Genting Malaysia in recent months.
Such opportunistic behavior, it explained, reduces predictability of the group’s leverage, which could deteriorate due to event risks.
S&P said it expects the company to reduce dividends in the coming years and continue the search for a buyer of land it owns in Miami but warned these actions alone may not be sufficient to sustainably improve leverage.
“As such, we believe Genting Bhd will need to devise other means to reduce its debt,” it stated.
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