Melco Resorts Finance Limited, the Melco Resorts & Entertainment subsidiary that operates City of Dreams Macau, Altira Macau and Mocha Clubs, is proposing to conduct an international offering of senior notes as part of its plan to redeem all outstanding 5.250% senior notes due 2026.
The senior notes offering had not been publicly priced, not the interest rate and other terms determined, at time of writing. However, CBRE Credit Research said Melco will issue US$500 million of notes to mature after the Macau gaming concession expiration in 2032. The notes, according to CBRE analyst Colin Mansfield, is expected to be “leverage neutral and slightly dilutive to free cash flow given the low coupon being refinanced”.
Mansfield added that Melco Resorts has a “well staggered maturity schedule with the nearest maturity not until 2027” with US$1.56 billion outstanding under the company’s revolver.
“Therefore, any upsize to today’s offering we expect to be utilized to paydown the revolver balance to increase Melco’s liquidity,” he wrote.
In a filing, Melco said the new notes are proposed to be senior obligations of Melco Resorts Finance, ranking equally with all of Melco Resorts Finance’s existing and future senior indebtedness.
The offering is planned to run in conjunction with a conditional cash tender offer for any and all of its outstanding 5.250% senior notes due 2026, although such a tender remains conditional upon the successful completion of the offering such that proceeds raised are sufficient to complete the purchase of the outstanding notes.
Completion of the proposed new notes offering is itself subject to market conditions and investor interest, Melco explained.
Ratings agency Moody’s recently outlined its expectation that Melco, which reported a 16.2% year-on-year rise in gaming revenues to US$1.1 billion in the three months to 30 June 2025, will reduce its operating leverage from around 6.7x as of 30 June 2025 to around 5.4x in 2026 due to a continued increase in its revenues and profits.
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