$MGM Moody's Lifts Ratings On Casinos On Asian Market Strength
3:57 PM ET 11/17/11 | Dow Jones
RELATED QUOTES
4:07 PM ET 11/17/11
Symbol Last % Chg
LVS
45.82 -2.37%
MGM
9.72 -3.38%
WYNN
120.78 -2.00%
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DOW JONES NEWSWIRES
Moody's Investors Service lifted its credit ratings on three casino operators one notch closer to investment grade, pointing to the strength of their Asian businesses.
The ratings firm lifted its ratings on Las Vegas Sands Corp. (LVS) and Wynn Resorts Ltd. (WYNN) to Ba2, two notches below investment grade. The firm has positive outlooks on both companies, as it noted earnings prospects in Asia will also allow the two companies to absorb any earnings pressure at its Las Vegas subsidiaries.
Moody's also raised MGM Resorts International (MGM) to B2, five notches below investment grade, and has a stable outlook on the company, noting it doesn't anticipate upward rating momentum given the high leverage. The firm said it also expects MGM to benefit from improved Las Vegas visitor volume, at least through 2012.
Moody's said it expects all three companies to benefit from favorable demand trends in Macau. The firm expects 15% to 25% year-over-year growth in Macau gaming revenue, driven by continued credit for high-rollers, increased spending by mass-market visitors, and a cap on gaming tables until 2013 that Moody's believes will prevent excessive competition.
Meanwhile, Moody's expects the Singapore market--where Las Vegas Sands operates one of only two casinos in the country--to maintain double-digit year-over-year growth in gaming revenue, helped by limited competition.
Casinos have seen revenue from Macau soar in recent years as the Chinese enclave has overtaken Las Vegas as a gambling destination.
Meanwhile, in Las Vegas, consumer confidence is holding up for now despite worrying signs in the broader economy. Improving demand from the convention crowd should help boost occupancy rates on the Las Vegas Strip, while regional U.S. casinos look poised to maintain solid revenue despite persistent unemployment in many markets.
Shares of Las Vegas Sands fell 2.9% to $45.59 in late trading, amid a broader market downturn. Wynn shares slipped 2.5% to $120.21 while MGM's shares slid 3.9% to $9.67.
-By Nathalie Tadena, Dow Jones Newswires; 212-416-3287; nathalie.tadena@dowjones.com;
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11-17-11 1557ET
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