U.S. ties Macau

U.S. ties Macau unit not pressured to pay dividends

Three U.S.-based Macau casino operators have not been pressured to resume dividend payments to their current parent company, a rating agency said.

S&P Global Ratings said in its webinar on Tuesday that such a dividend scenario looks more likely in 2024, but stressed that neither U.S.-based Wynn Resorts, MGM Resorts International nor Las Vegas Sands is currently talking about the dividend topic.

Sands China Ltd recently confirmed the lender's terms regarding its ability to issue dividends. This relates to an acceptable consolidated leverage ratio and could continue to apply until early 2025.

All three U.S. casino brands under discussion at a briefing on Tuesday have sufficient liquidity to support investment plans in markets outside Macau, S&P Global said. The companies are linked to Macau casino businesses Win Macau, MGM China Holdings and Sands China, respectively. 경마사이트프로

The briefing session was led by Melissa Long, director of corporate ratings at S&P, and Aras Poon, vice director of corporate ratings.

Related U.S. companies should still maintain "healthy cash flow" for opportunities outside Macau and beyond China's only legitimate casino destination, Ms Long said.

She cited examples of outside investment or investment opportunities as follows. "In addition to Sands' potential with New York and Singapore and MGM [Resource] Japan and Wynne [Resource] New York casinos, we are expanding our operations in Boston [Massachusetts] and pushing for the development of integrated resorts in the UAE."

It was a reference to a potential competition for downtown New York license that could include all three brands: Las Vegas Sands' commitment to expand its Singapore Marina Bay Sands resort, MGM Resorts' participation in Japan's Osaka casino resort plan, and Win Resorts' expansion of Massachusetts Angkor Boston Harbor. The latter group also pledged to invest and manage a $3.9 billion complex casino with its regional partner, the United Arab Emirates (RASA).

Las Vegas Sands completed a $6.25 billion sale of its Venetian resort in Las Vegas, Nevada, in February last year and continues to generate cash from its Singapore operations. Ms Long said the early recovery in the U.S. domestic casino market provided "healthy cash generation" compared to the time it took for China and Macau to open.

Workload continues to increase

"I really don't see the pressure or need to pay an upward dividend from Macau to the (U.S.) parent company," she said. "In fact, we assumed that cash flow would recover with a baseline forecast, and we made some assumptions about the resumption of potential future dividends in 2024." But that's the assumption we're making and no operator has mentioned resuming dividends in Macau," he said.

Before focusing on the dividend issue, S&P Global Director said he believes U.S. companies are "more focused on Macau's recovery in cash flow, improving credit measures and capital spending needs."

All six Macau operators had to commit to new capital investments in the Macau market. Each operator is eligible for a new decade of gaming benefits that began in January.

Last week, S&P Global raised its recovery outlook for Macau's mass market and VIP gross gaming revenue (GGR) to 2019 levels. The update reflects Macau's earlier-than-expected return on the back of premium public play, Mr Pune told a webinar.

In its webinar highlighted data, S&P Global said the three casino brands, along with Melco Resorts and Entertainment, could recover their respective credit indicators to 2019 levels by 2025, with more than 90% of Macau-related rating issuers only maturing after 2025.

Mr Pune said the agency did not expect "many refinancing" to occur for such game names this year or next year. At the moment, he said the need for such measures was "low" and capital market costs were "too high."

"We believe issuers will take a more 'waiting' approach until the Macau market recovers to a much better level," Mr Pune said in a webinar.