Ratings agency Moody’s Investors Service has affirmed a Baa2 issuer rating for Malaysian casino investor Genting Berhad and its wholly-owned subsidiary Genting Overseas Holdings Limited, citing its strong corporate profile and exposure to key markets in Malaysia and Singapore.
However, the outlook for both remains negative with Moody’s stating an upgrade is unlikely over the next 12 to 18 months.
The negative outlook reflects uncertainty regarding the global operating environment and pace of recovery of the operating performance of Genting group’s integrated resorts, Moody’s said, including its US$4 billion Resorts World Las Vegas (RWLV) development due to open this summer.
A further downgrade is also possible if there is any deterioration in cash flows coming from Genting Malaysia and Genting Singapore, any sign of excessive cash leakage via aggressive cash dividends or investments in businesses outside the group, a material change in its disciplined financial management or the regulatory environments in which it operates, or if the company’s adjusted debt/EBITDA stays above 5.0x.
More positive is the longer-term outlook with Moody’s pointing to Genting’s 49.5% ownership of Genting Malaysia – operator of Resorts World Genting – and 53% ownership of Genting Singapore, operator of Resorts World Sentosa, as powerful assets.
“The rating affirmation reflects Genting Berhad’s excellent liquidity and good access to funding, which provides sufficient cash runway despite continued dividend payouts amid weaker operating cash flow across all its integrated resorts worldwide,” said analyst Junling Tan.
Moody’s also affirmed Genting Singapore’s higher A3 issuer rating, supported by sizable cash holdings, minimal debt and better-than-expected earnings recovery in the second half of 2020, but added, “Given the linkages between Genting Singapore and its ultimate parent, Genting Berhad, Genting Singapore’s rating will remain constrained at no more than two notches above that of Genting Berhad.”
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