Fitch Ratings Inc. announced that it had upgraded the so-called Issuer Default Rating for the well-known gambling operator Las Vegas Sands Corp. from ‘BB+’ to ‘BBB-‘. The upgrade also concerns the company’s subsidiaries, Sands China Ltd. included. In addition to this, their senior secured credit facilities had also been upgraded from ‘BBB-‘ to ‘BBB’.
Fitch Ratings Inc. is one of the three nationally recognized statistical rating organizations by the independent U.S. Securities and Exchange Commission. Generally speaking, the company’s Issuer Default Rating represents a given entity’s susceptibility to default on financial debts. Being upgraded to ‘BBB-‘ means that Las Vegas Sands Corp. is at very low risk of default.
Fitch Ratings also pointed out that the casino operator is very likely to maintain its current stability in future.
Experts from the research house explained that Las Vegas Sands’ upgrade was mainly due to the conservative approach the company had taken three years ago when it had began to “wind down its comprehensive capital development pipeline”.
Other important factors that contributed to Las Vegas Sands’ higher grade are its strong liquidity, its positive discretionary cash flow, and its ability to convert non-core assets into cash.
What is more, the company currently operates venues in some of the most attractive destinations in the world, which makes it one of the most popular gambling operators. At present, Las Vegas Sands manages four casinos in Macau, one in Singapore, and three other in the U.S.
As previously commented, revenue from gaming activities in Macau has been marking a drop during the past several months. This was mainly attributed to the corruption scandal in China, the decrease in VIP players that traveled to the administrative region, and the visa restrictions that were implemented recently. A decrease was posted from Singaporean market as well.
Fitch Ratings, however, pointed out that Las Vegas Sands’ exposure to Macau’s VIP segment is not that significant (about 16% of the company’s profits are coming from VIP players), which means that the operator is less dependent on such volatile earnings.
The research house stated that the year-on-year decrease in Sands China’s monthly revenues has averaged 6% for the past half a year. The company started posting drops in turnover back in June.
According to Fitch Ratings’ forecasts, the gaming operator will generate a negative gaming revenue growth of 2% in 2014 and a 4% one during the next year.
In its report, the research house also claimed that it expects Sands China’s The Parisian to open doors for guests and visitors by the middle of 2016. As it was announced earlier this week, the $2.7-billion project for a Paris-themed resort was given all the necessary approvals by the local government.
