Las Vegas Sands cut to junk by S&P on slower Macau recovery

[LAS VEGAS] S&P Global Ratings has downgraded Las Vegas Sands to junk, citing a slower recovery in the Macau gaming market due to omicron cases, according to a report Wednesday morning.

S&P now rates the company BB+, one step below investment grade. The gaming company is still rated investment-grade by Moody's Investors Service and Fitch Ratings. One of those would need to downgrade the company for Las Vegas Sands to fall out of investment-grade bond indexes that are widely tracked by large mutual funds and exchange-traded funds.

The gaming industry has struggled to recover from the Covid-19 pandemic as omicron cases spiked across the world in recent months, causing another round of shut-downs and restrictions on international travel which are just now beginning to lift.

Las Vegas Sands owns and operates casino resorts in Macau and Singapore, and reported total debt of US$14.8 billion through Dec 31, according to a filing.

The stock fell 0.3 per cent to US$47.92 at 10:49 am New York time. The company's 3.9 per cent notes due 2029 fell one point to trade at about 97 cents on the dollar, according to Trace bond pricing data.

S&P expects the company to see significant stress on revenue and cash flow and placed the outlook on negative in preparation for potential future downgrades. The ratings company forecasts that the Macau market will see gross gaming revenues in 2022 at levels just 30 per cent to 40 per cent of the amount seen in 2019. BLOOMBERG