Fitch Ratings has assigned a “BB-” rating to MGM China’s US$750 million offer of 4.75% senior notes due February 2027, adding a Negative ratings outlook on COVID-19 concerns.
The rating comes after MGM China priced the offer late last week, adding that it intends to use the net proceeds to repay a portion of the amounts outstanding under the company’s Revolving Credit Facility, currently at around US$770 million, and for general corporate purposes.
Both MGM China and its parent, MGM Resorts International, have also received “BB-” Issuer Default Ratings (IDR).
Fitch said it views the proposed issuance neutrally as it should “not materially affect pro forma leverage and provides additional liquidity to MGM China,” but will add more permanent debt to its capital structure.
The Negative Outlook, Fitch added, reflects the “risks and uncertainty the global gaming industry is facing from the coronavirus pandemic, particularly jurisdictions that rely on international or fly-in visitation.” The outlook could be revised to “stable” once there is more clarity around a recovery trajectory.
The “BB-” IDR rating assigned to both MGM and MGM China reflects the company’s strong liquidity but weaker financial flexibility after the parent sold off some of its Las Vegas Strip properties.
MGM Resorts recently reported a net loss of US$448 million in 4Q20, however there were positive signs in Macau where MGM China printed positive EBITDA of HK$367.2 million (US$47.4 million) for the quarter, improved from an Adjusted EBITDA loss of HK$730.6 million (US$94.2 million) in Q3.
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