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S&P rates Studio City BB- and “stable”


Standard & Poor's Ratings Services said that its rating and outlook on Studio City Co. Ltd. is BB- and “stable” due to the resort not being immediately affected by the uncertainty of gaming table allocation.

Following the Macau government’s allocation of 150 gaming tables to Galaxy Macau Phase 2, which opened on May 27, S&P says Studio City may fail to secure at least 400 gaming tables by October 1, 2016, which is a condition under its existing bank facilities. But “in our base case, we assume Studio City would obtain about 150 gaming tables in 2015 and another 150-200 tables in 2016,” S&P said.

“This is comparable to what Galaxy Macau Phase 2 obtained at its opening.”

The ratings firm said Studio City’s failure to secure sufficient gaming tables before the deadline could trigger a technical default and payment acceleration. 

“However, we believe Studio City still has time to avoid such an event through the following measures,” which includes the chance to renegotiate the table numbers or deadline; to obtain a waiver from creditors; to refinance the existing bank facilities, and to get support from Melco Crown Entertainment, which currently controls 60 percent of Studio City though does not guarantee Studio City's debt obligations.

“In our view, MCE Group has the ability to support Studio City in case of a credit stress, and this support underpins our rating on Studio City.”

“We will reassess the rating impact on Studio City once we have better visibility on the gaming table allocation and possible actions that Studio City and MCE might take.”

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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