Fitch Ratings has assigned a first-time ‘BB-‘ Issuer Default Rating (IDR) to the Wynn Resorts group, together with a ‘stable’ outlook.
According to the agency, the new rating reflects the ‘high-quality portfolio’ of the group’s gaming assets, the expected improvement in Macau’s gaming market in terms of visitation, and gaming activity that is expected to drive further improvement in credit metrics.
Other factors include strong results in Las Vegas, and robust liquidity that should fund near-term capital projects and could lead to further debt reduction.
The new rating covers Wynn Resorts, Limited, Wynn Resorts Finance, LLC , Wynn Las Vegas, LLC, Wynn Macau, Limited, and WM Cayman Holdings Limited II.
The strong rebound in Macau gaming revenues since early-2023 is expected to significantly contribute to Wynn’s overall credit improvement.
Fitch’s estimation indicates that mass market baccarat has nearly returned to 2019 levels, particularly in the premium mass segment, which aligns with Wynn’s target market, and despite visitation and airline capacity remaining below 2019 levels, their expected rebound is anticipated to further drive revenue growth in the near term.
‘Results at Wynn Palace have shown a robust response, with mass market revenues and property EBITDAR margins for 3Q23 already surpassing 2019 levels. However, Wynn Macau‘s rebound has been slightly slower due to its shift away from the VIP market towards the premium mass market,’ the rating agency pointed out.
Wynn is expected to be free cash flow positive over the forecast period, and its liquidity remains robust with significant cash reserves and availability on the revolving credit facility.
As for Las Vegas, Wynn’s properties have experienced strong improvement post-pandemic due to their ‘high-quality nature and favorable reputation among affluent customers’, with the potential decline in gaming revenues over the next two years possibly offset by stronger room rates, driven by the return of group and convention customers, along with increased visitation attracted by entertainment offerings and sporting events.
Liquidity includes $2.8 billion in cash, $792 million in short-term investments, and $737 million of availability on a WRF revolver.
Fitch expects the credit will continue to improve despite the existence of several material capital projects in Macau, Las Vegas, Boston and the United Arab Emirates.
Wynn currently has several planned expansions in Boston, Macau, and Las Vegas which include room renovations, non-gaming operations, and additional amenities to enhance the overall guest experience.
The US-based gaming operator also announced a joint venture development with RAK Hospitality in January 2022 for an integrated resort on Al Marjan Island, a man-made island in Ras Al Khaimah, UAE.
Other potential projects could include a casino development in New York if the company is awarded a license by the state gaming commission.
