MGM China Holdings’ plans to issue senior unsecured notes is unlikely to materially affect the company’s leverage and provides additional liquidity to MGM China, Fitch Ratings said in a note.
The credit ratings agency has assigned a ‘BB-‘/’RR4’ rating to the notes with a negative outlook. MGM China intends to use the proceeds for general corporate purposes including paying down its revolver, of which $770 million was drawn as of Dec. 31, 2020.
Negatively, the notes add more permanent debt to its capital structure.
“MGM’s Negative Rating Outlook continues to reflect the risks and uncertainty the global gaming industry is facing from the coronavirus pandemic, particularly jurisdictions that rely on international or fly-in visitation,” it said. “Fitch could revise the Rating Outlook to Stable when there is a greater degree of confidence in the gaming industry’s recovery trajectory and MGM’s ability to de-lever back to 6.0x adjusted gross leverage (on a consolidated basis).”
The world is bouncing back, or at least coming to grips with the fact that going forward not much will be the same as before. Commendably, this industry quickly understood the need to adapt to a new normal, and that the days of targeting the low hanging fruit of the VIP sector are gone.
Over the years, many of the answers have been remarkably prescient in their forecasts for the near-term direction of Asia’s gaming industry. However, we can safely say that no one came anywhere close to guessing what 2020 may have had in store.