Moody’s Says Sands China Unlikely to See Full Recovery Until 2024

Summary

• Sands China operations are being impacted by the recent rise in COVID-19 cases
• Sands China revenues won’t fully recover until 2024
• The casino giant still has strong liquidity despite its current negative credit profile

Sands China operations have continued to take a hit due to a fresh wave of COVID-19 infections across the city and it might take until 2024 for the casino giant to see a full recovery in gross gaming revenue (GGR) which has so far remained below 2019 levels.

According to leading credit ratings provider Moody’s Investors Service Inc., the rising number of positive cases which has resulted in heightened travel restrictions into and out of Macau, will make the situation worse for casinos that have yet to fully recover from the first outbreak in 2020. One of those is Las Vegas Sands which owns and operates various properties in Macau.

Analysts said the company can expect to see an improvement in GGR in the second half of 2022, but numbers will remain weak until at least 2024. Moody’s pointed out that recovery will be entirely dependent on the lifting of travel restrictions and the consistent increase in leisure trips to Macau. This observation applies to the city’s casino industry in general which remains open despite the spike in COVID-19 infections which began on June 19.

On June 29, health authorities logged 70 more positive cases within 24 hours, bringing the total number of infections to 484.

Moody’s has given Sands China a “Baa3” negative credit rating, which points to very weak credit metrics, and the company is expected to remain in that category throughout the year, which could extend through 2023.

The institution said Sands China faces challenging times ahead in achieving a favorable credit profile which will largely rely on the amount of money consumed during a period in which visitor numbers are expected to continue to decline, and the level of earnings recovery.

Las Vegas Sands Maintains Strong Liquidity

Despite the negative outlook this year, Las Vegas Sands Corp has maintained “strong” liquidity with almost US$3.5 billion of fully-available revolver facility and US$6.4 billion of consolidated cash. The company also banks on the popularity and favorable reputation of its casino properties, alongside its very strong credit metrics prior to the COVID-19 pandemic.

Moody’s said the casino giant will also benefit from the positive long-term gaming demand trends across all of its geographic markets. Las Vegas Sands has shifted its focus to Asia after selling its Las Vegas properties under a $6.25 billion deal.