Fitch assigns ‘BB-’ rating to Wynn Resorts, subsidiaries

Fitch Ratings Inc. has rated Wynn Resorts Ltd. and many of its subsidiaries, including Wynn Macau Ltd., as “first-time” ‘BB-‘ issuer default candidates. A study issued on Tuesday said that the group’s rating outlook is “stable.”

Based on Wynn Resorts’ excellent portfolio of gaming assets and the anticipated growth of Macau’s gaming industry in terms of visitor arrivals and gaming activity—both of which are anticipated to strengthen the group’s credit metrics—the grades have been assigned.

Outstanding profitability in Las Vegas, Nevada, as well as having enough cash on hand to finance upcoming capital projects and potential debt reduction were contributing reasons.

The company’s average diversification and the cash required for ongoing and future projects, however, somewhat offset these favorable factors and might impede the pace of significant credit improvement, the rating agency claims.

The Wynn Group owns and operates the Wynn Palace in Cotai as well as the Wynn Macau casino resort on the Macau peninsula. The rebounding gaming industry in Macau is seen by Fitch as a significant source of strength for the Wynn Group.

According to Fitch, Macau’s mass-market baccarat has mostly recovered to levels seen in 2019, particularly in Wynn’s target market in the premium mass sector. Although gaming revenue has grown significantly, tourist numbers and aircraft capacity remain below 2019 levels. However, more enhancements are expected to provide a sizable revenue boost soon.

The parent firm oversees Encore Boston Harbor in Massachusetts, is building a casino in Ras Al Khaimah, United Arab Emirates, and is applying for one of three licenses in downstate New York in addition to its Las Vegas casinos.

Due to growth in EBITDA and partial debt reduction, Fitch projects that the group’s earnings before interest, taxes, depreciation, and amortization (EBITDAR) leverage would rise from just under 7x in 2023 to the low-5x level by 2025.

Through 2025, Fitch anticipates that the Wynn group will have positive cash flow. With $2.8 billion in cash, $792 million in short-term assets, and $737 million accessible via a revolving credit line, the firm has good liquidity.

Original story by: GGRAsia