The EBITDA leverage of Macau concessionaire SJM Holdings is expected to increase to more than 8x in 2025, widened from 7.0x in 2024, due to squeezed margins at the company’s Cotai integrated resort Grand Lisboa Palace and the impact of its satellite casino closures, according to Fitch Ratings.
Leverage should eventually narrow back to below 5x in 2027, the agency added, with SJM still on a deleveraging path in the medium term as it looks to improve free cash flow and focuses on debt reduction.
Nevertheless, Fitch on Friday downgraded the Outlook on SJM’s Long-Term Foreign-Currency Issuer Default Rating (IDR) from Stable to Negative while affirming the IDR and senior unsecured rating at “BB-“.
“The Negative Outlook reflects heightened uncertainty around SJM Holdings’ deleveraging trajectory, as recent results indicate slowing EBITDA and cash flow improvement from GLP,” it said. “Fitch still expects SJM Holdings’ leverage metrics to improve to within the “BB-“ threshold over the forecast period, but any further operational weakness could lead to negative rating action.”
Fitch pointed to GLP’s poor 2Q25 results as being central to the agency’s latest observations, noting that 1% quarter-on-quarter revenue growth and an EBITDA margin of 3% were both below expectations even on a luck-adjusted basis. This, it added, contrasted with strong industry-wide gross gaming revenue growth during the quarter as SJM lost market share to competitors’ newly opened hotels and intensified promotional activities.
“GLP also recorded a significant increase in operating expenses during the quarter, mainly due to increased marketing expenses,” Fitch analysts wrote. “This, along with stagnant revenue growth, led to margin contraction. The company continues to work on various initiatives to improve GLP’s mass appeal through better connectivity, food and beverage, and retail and event offerings but its effectiveness in increasing market share remains uncertain.”
On the issue of SJM’s nine satellite casinos – all of which are required to close by the end of the year – the impact on SJM’s credit profile will depend on its ability to recapture the market share of those outgoing satellite casinos, as well as the terms of acquisition of two satellite properties the company is looking to acquire.
As reported by IAG, SJM has already shuttered one of its satellites, Casino Grandview, and will permanently close at least six more but has outlined its intention to acquire Ponte 16 – of which it currently owns 51% – and L’Arc on the Macau peninsula.
It is also acquiring additional gaming space at Casino Lisboa from its parent company Sociedade de Turismo e Diversões de Macau (STDM) to relocate some tables and machines from the closing satellites.
“Fitch’s base case assumes that SJM will retain two-thirds of the outgoing satellite casinos’ market share, with tables reallocated to its properties on the peninsula, given their proximity and similar positioning,” the agency said. “Such tables should generate higher margins than the previous satellite operations, leading to EBITDA accretion.”
Fitch added that it expects SJM to successfully refinance a US$500 million bond due in January 2026 and HK$1.25 billion (US$161 million) and MOP$300 million (US$37.5 million) of bonds due in May 2026 via new bank loans and drawing down on its HK$3.1 billion (US$398 million) undrawn revolver.
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