{"id":213271,"date":"2022-05-12T11:27:43","date_gmt":"2022-05-12T18:27:43","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=213271"},"modified":"2022-05-12T16:54:35","modified_gmt":"2022-05-12T23:54:35","slug":"macau-weighs-on-mgm-credit-profile-says-fitch-ratings","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/macau-weighs-on-mgm-credit-profile-says-fitch-ratings\/","title":{"rendered":"MGM Credit Outlook Negative Amid Macau Uncertainty, Fitch Pulls Rating"},"content":{"rendered":"

MGM Resorts International (NYSE:MGM) still faces regulatory uncertainty in Macau, and that\u2019s prompting Fitch Ratings to maintain a \u201cnegative\u201d rating watch on the casino operator.<\/p>\n

\"MGM
The MGM Grand in Macau, seen above. Fitch sees risks for the operator in the Chinese territory. (Image: CNBC<\/em>)<\/figcaption><\/figure>\n

The research firm also pulled its credit rating on the gaming company. MGM owns about 56% of MGM China, which controls two integrated resorts in the world\u2019s largest casino hub. While concession renewal risk is low, Fitch voices concerns on \u201cthe possibility of weaker operating economics, onerous capital commitments, and reduced ability to upstream cash to parent entities.\u201d<\/p>\n

Macau\u2019s gaming industry is slumping and rebound projections are consistently extended, as the Chinese Communist Party (CCP) implements a widely criticized zero tolerance policy<\/a> on the coronavirus.<\/p>\n

Fitch continues to forecast 2022 to be another challenging year for Macau’s gaming revenues given visitation volatility stemming from China’s pursuit of a \u2018zero-COVID\u2019 policy,\u201d<\/strong> notes the credit ratings agency.<\/p><\/blockquote>\n

Fitch previously had a \u201cBB-\u201c grade on MGM debt — a junk rating.<\/p>\n

Fitch Sings Familiar Tune on MGM<\/h2>\n

Fitch\u2019s view on MGM is a familiar one in the gaming industry, and one that date backs to the initial reopening phase in 2020.<\/p>\n

Operators that have robust Las Vegas footprints and extensive regional portfolios to go along with Macau exposure are leveraging domestic strength to offset some of the weakness<\/a> at their venues in the Chinese territory.<\/strong><\/p>\n

As the largest operator on the Strip and the company behind eight regional gaming destinations, MGM checks those boxes.<\/p>\n

\u201cDomestic gaming has fully recovered to 2019 levels in regional markets, and Las Vegas continues to exhibit strong domestic gaming demand and visitation trends,\u201d adds Fitch. \u201cThe strong performance in Las Vegas, both slots and table games, is offset by the still- recovering international and convention segments, although the latter will come back more in earnest in second half 2022.\u201d<\/p>\n

The research firm estimates MGM\u2019s regional casinos will modestly surpass 2019 levels this year, with Las Vegas fully recovering in 2023.<\/p>\n

MGM Financial Flexibility<\/h2>\n

At the end of the first quarter, MGM had $2.9 billion in cash (including restricted cash) and $1.6 billion in revolver availability, while MGM China had $288 million in cash and $1.3 billion in revolver availability.<\/p>\n

Fitch credits the gaming opportunity for possessing a favorable asset mix and a series of transactions that raised capital. But the ratings agency also points out the operator created significant long-term lease debt by selling essentially all of its meaningful property assets.<\/p>\n

MGM \u201ccreated $4.3 billion of lease-equivalent debt in the process. The CityCenter & Cosmopolitan transactions in 2021 also created another $3.3 billion in lease-equivalent debt,\u201d <\/strong>said the research firm.<\/p>\n

The recently completed sale<\/a> of MGM Growth Properties to VICI Properties (NYSE:VICI) generates $4 billion in proceeds for MGM that can be used to pare debt. Fitch sees MGM\u2019s gross adjusted leverage heading below 6x next year, putting it on pace to reach management\u2019s stated goal of gross adjusted leverage of 4x to 5x.<\/p>\n","protected":false},"excerpt":{"rendered":"

MGM Resorts International (NYSE:MGM) still faces regulatory uncertainty in Macau, and that\u2019s prompting Fitch Ratings to maintain a \u201cnegative\u201d rating watch on the casino operator. The research firm also pulled its credit rating on the gaming company. MGM owns about 56% of MGM China, which controls two integrated resorts in the world\u2019s largest casino hub. […]<\/p>\n","protected":false},"author":46,"featured_media":213272,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[69069,10],"tags":[],"acf":[],"yoast_head":"\nMacau Weighs On MGM Credit Profile, Says Fitch Ratings<\/title>\n<meta name=\"description\" content=\"MGM domestic business thriving, but Macau is a drag on company credit outlook, says Fitch.\" \/>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Macau Weighs On MGM Credit Profile, Says Fitch Ratings\" \/>\n<meta property=\"og:description\" content=\"MGM domestic business thriving, but Macau is a drag on company credit outlook, says Fitch.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/macau-weighs-on-mgm-credit-profile-says-fitch-ratings\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2022-05-12T18:27:43+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-05-12T23:54:35+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/05\/MGMG-1-scaled.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2560\" \/>\n\t<meta property=\"og:image:height\" content=\"1703\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/macau-weighs-on-mgm-credit-profile-says-fitch-ratings\/\",\"url\":\"https:\/\/www.casino.org\/news\/macau-weighs-on-mgm-credit-profile-says-fitch-ratings\/\",\"name\":\"Macau Weighs On MGM Credit Profile, Says Fitch Ratings\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-weighs-on-mgm-credit-profile-says-fitch-ratings\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-weighs-on-mgm-credit-profile-says-fitch-ratings\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/05\/MGMG-1-scaled.jpg\",\"datePublished\":\"2022-05-12T18:27:43+00:00\",\"dateModified\":\"2022-05-12T23:54:35+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"MGM domestic business thriving, but Macau is a drag on company credit outlook, says Fitch.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-weighs-on-mgm-credit-profile-says-fitch-ratings\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/macau-weighs-on-mgm-credit-profile-says-fitch-ratings\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/macau-weighs-on-mgm-credit-profile-says-fitch-ratings\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/05\/MGMG-1-scaled.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/05\/MGMG-1-scaled.jpg\",\"width\":2560,\"height\":1703,\"caption\":\"The MGM Grand in Macau. 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