Studio City Finance Limited, the operating entity of Melco Resorts & Entertainment’s Studio City integrated resort in Macau, announced Tuesday that it has completed a series of repurchases of its outstanding 6.000% Senior Notes due 2025, to the value of US$37,782,000.
The repurchase represent 7.6% of the aggregate principal amount of the notes at the time of the initial listing – US$500 million – with Studio City having immediately cancelled all of the repurchased notes.
In a note, CBRE Credit Research analyst Colin Mansfield said the repurchase brings the total amount of the 6.000% Senior Notes due 2025 outstanding to US$260 million and reduces Studio City’s leverage by a further 0.2x since 30 June 2024 to 9.1x.
Parent Melco Resorts stated during its recent 2Q24 earnings call that it is actively looking at refinancing options for the notes ahead of their July 2025 maturity.
Mansfield also offered positive sentiment on the Studio City outlook, despite a quarterly increase in operating expenses in Q2 due to residencies, wages and FTE increases, stating “we remain satisfied with the property’s recovery and overall credit profile.
“Studio City’s more affordable retail footprint has helped foot traffic relative to Melco’s other luxury offerings when considering the challenged Chinese macro backdrop. In addition, mass table count rose quarter-on-quarter and posted an average daily win of US$13,300 (albeit with slightly higher hold).
“This marks the fourth consecutive quarter that mass table win per day exceeded US$10,000 and the third consecutive quarter it exceeded 2019 productivity levels.”
Mansfield added that CBRE calculates Melco’s group-wide leverage currently sits at 7.3x with the company having outlined in all recent earnings calls that debt reduction remains its primary focus for the immediate future. Despite this, Melco earlier this week repurchased around US$44.5 million of its own shares on the open market, claiming the transaction showed confidence in the company’s long-term strategy and growth prospects.
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