Moody’s affirms Genting Singapore’s A3 rating

Genting Singapore’s Resorts World Sentosa; taken 2018Genting Singapore’s Resorts World Sentosa; taken 2018

Moody’s Investors Service affirmed Genting Signapore’s A3 issuer rating, with a stable outlook, saying the casino-resort operator won’t need to take on more debt to fund its planned S$4.5 billion to expand Resorts World Sentosa.

Genting Singapore said last week it had committed to the investment to revamp and expand the integrated resort on Singapore’s Sentosa Island, including growing the Universal Studios Singapore park, over 2019-2025.

Moody’s noted Genting Singapore has a “sizeable cash position” of S$4.2 billion, compared with gross debt of around S$1 billion on its balance sheet. The ratings agency estimated the company would generate free cash flows of around S$450 million a year after covering its obligations, such as maintenance spending of around S$150 million a year and S$400 million of dividend payouts.

“Consequently, GENS has sufficient resources to fund the expansion without incurring debt,” Moody’s said.

However, Jacintha Poh, a senior credit officer at Moody’s and the lead analyst for Genting Singapore, warned the Singapore expansion plans may reduce the company’s financial flexibility for any entry in Japan’s market.

“The timing and scale of such investments, ultimately hinges on the awarding of a Japanese license, which remains uncertain at this point. A debt-funded expansion into Japan, however, will weaken credit quality,” Poh said in a statement.

Moody’s said raising Genting Singapore’s rating was unlikely, as the company’s scale is small compared with global peers and its operations are concentrated in Singapore.

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