The credit rating outlook for Macau casino operator Wynn Macau, Ltd and its parent, Wynn Resorts Finance, LLC, has been upgraded from “stable” to “positive” due to improved leverage expected this year as the Macau gaming market recovers. That is according to a document issued by Moody’s Investors Service Inc on Tuesday regarding the group’s rating action.
Moody’s also confirmed the senior unsecured notes of Wynn Macau Ltd and Wynn Las Vegas LLC, the latter being a wholly-owned subsidiary of Wynn Resorts Finance, at “B1”.
Wynn Macau Ltd is a 72.2% owned subsidiary of Wynn Resorts Finance, which is a wholly owned subsidiary of Wynn Resorts Ltd., a gambling operator based in the United States.
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Says Moody’s: “The rating affirmation and positive outlook reflect our projection of improved leverage for Wynn [Resorts Finance] in the mid 5x debt/EBITDA [earnings before interest, taxation, depreciation and amortisation] range for 2024.”
The institution added that Macau’s gaming market had “recovered significantly” and that “continued strong performance at the company’s Las Vegas [Nevada] and Encore Boston Harbor [Massachusetts] properties,” in the United States, had supported the group’s revenue and EBITDA growth.
The rating agency also stated that their outlook perspective reflected a “recent reduction in debt, with nearly US$1.2 billion of debt permanently reduced”.
Additional comments from Moody’s: “The positive outlook also incorporates our view that the company will maintain good liquidity, with ample cash balances.”
Wynn Resorts Finance received a “B1” corporate family grade from the ratings agency, which recognized the company’s reputation and “successful track record of building large, high-quality destination resorts”.
It stated: “The credit profile also incorporates [the fact] that Wynn’s Macau operations have recovered significantly, reducing leverage levels.” Wynn’s solid liquidity and low debt capital costs also help to support the ratings.
One of Wynn Resorts Finance’s primary credit worries is that its income and cash flow remain “heavily concentrated” on its Macau businesses.
“We anticipate that Wynn will seek additional significant resort development possibilities across the world, including as its project in the United Arab Emirates. As a result, the company’s leverage will occasionally rise due to largely debt-financed development projects,” according to the ratings agency.
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