MGM China note issue is largely neutral, says Fitch

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).”