MGM-Resorts

Moody’s Investors Service has downgraded MGM Resorts International‘s Corporate Family Rating to B1 from Ba3, reflecting slower than expected recovery in Macau and the high leverage level the company is expected to carry. 

The ratings downgrade also includes a downgrade in its Probability of Default Rating to B1-PD from Ba3-PD and the company’s senior unsecured notes to B1 from Ba3. MGM China Holdings Limited’s senior unsecured notes were also downgraded to B1 from Ba3.

“Continued weakness in Macau, including reduced visitation levels and gaming revenue, continues to weigh on the company,” it said. 

Whilst Macau’s recovery has been slow, Moody’s noted that recovery in the company’s regional and Las Vegas operations has been strong and expects good earnings at these operations will continue under its baseline economic forecast.

“MGM’s B1 CFR reflects the improvement in the company’s regional and Las Vegas operations. The rating is supported by the company’s large scale, a diversified presence on the Las Vegas Strip across multiple customer segments, a solid position within several regional markets that are leading the company’s recovery.”

“However, the earnings are not enough to offset Moody’s view that the planned transactions are leveraging and that MGM will maintain leverage significantly above pre-pandemic levels. Leverage is expected to be maintained over 7x debt-to-EBITDA in 2023, above our 6x downgrade threshold level.”