[ET Net News Agency, 24 June 2020] Moody's Investors Service said in a new report that
the coronavirus pandemic has severely hit the earnings of APAC gaming companies, keeping
their leverage elevated. But most have sufficient liquidity to weather the storm.
"Falling international travel, property closures and the ongoing social distancing
measures will keep the gaming sectors' prospects weak until at least 2021. We expect that
the combined EBITDA of gaming companies with exposure to APAC will fall around 70% in 2020
before gradually recovering in 2021," said Jacintha Poh, a Moody's Vice President and
Senior Credit Officer.
Despite the bleak outlook, most rated companies have sufficient liquidity to meet their
cash needs and debt payments over the next 12 months. Genting Singapore Limited (A3
negative) has the largest liquidity buffer, likely sufficient for more than three years.
But on the other end of the scale, the liquidity of Studio City Finance Limited (B1
negative) will run out in less than a year.
Gaming companies' leverage will remain elevated in 2021 versus 2019, amid an increase in
debt to boost liquidity - e.g. since April five companies have raised a total of around
US$6.7 billion - as well as slow earnings recovery.
Moody's expects that operators in Malaysia (A3 stable) and Australia (Aaa stable) could
recover sooner because of their significant domestic customer base, whereas Macao SAR's
(Aa3 stable) recovery will rest on China's (A1 stable) resumption of the individual visa
scheme for Chinese citizens visiting the city.
Large expansionary capital spending will also constrain the pace of leverage recovery,
as most companies will likely continue their significant expansionary projects on the
expectation of an eventual sector recovery. As such, Moody's expects that some companies
will draw down project financing loans to complete ongoing developments, keeping debt
levels elevated. (KL)