Moody’s Ratings has placed the Baa2 issuer ratings of Genting Bhd on review for downgrade amid concern the company’s voluntary offer to acquire the remaining 50.6% of Genting Malaysia it doesn’t already own will push credit metrics beyond the downgrade threshold.
The Baa2 issuer rating of Genting Overseas Holdings Limited (GOHL) – which holds the group’s 53% stake in Genting Singapore – and the A3 issuer rating of Genting Singapore Limited, operator of Resorts World Sentosa, are also on review for downgrade.
Genting Bhd announced last week the voluntary takeover offer for Genting Malaysia – of which it currently owns 49.46% – in a transaction that could cost as much as US$1.59 billion. The vast majority is to be funded by debt.
“The review for downgrade reflects our expectation that Genting Bhd’s credit quality will weaken materially, depending on the level of acceptance of its proposed conditional voluntary take-over offer for Genting Malaysia, which will be largely debt-funded,” Moody’s analyst says Anthony Prayugo said in a note.
“Genting Bhd’s credit metrics are already weak and the proposed transaction would delay any meaningful deleveraging.”
Moody’s said it expects Genting Bhd’s adjusted debt/EBITDA will rise to about 5.1x in 2025 if the proposed acquisition of Genting Malaysia is completed and funded as announced. This is from an already low base, with the company’s credit metrics already weak and having been above its 4.0x downgrade threshold for “several years”.
Notably, the possible downgrade does not take into account the additional US$5.5 billion Genting Malaysia subsidiary Genting New York LLC has pledged to invest into expanding Resorts World New York City should it win one of the three full commercial casino licenses on offer.
Moody’s said it expects to conclude the review of all ratings within 60 to 90 days.
“The review will focus on the final funding structure of the proposed transaction, the company’s plan to reduce leverage and its financial policy after completion,” it explained.
“Genting Bhd’s rating will likely face a multi-notch downgrade if its financial profile weakens because of a material increase in debt that results in higher leverage and the absence of any corresponding plan to reduce it.”
The review for downgrade of GOHL is, the agency added, due to its close linkage and alignment of core operations with Genting Bhd and the parent’s ability to extract cash and redeploy it as required.
Likewise, Genting Singapore’s review is linked to the status of Genting Bhd – albeit acknowledging that the RWS operator sits two ratings notches above its ultimate parent.
RWS is currently embarking on a SG$6.8 billion (US$5 billion) expansion of its own although Moody’s noted that this expense would be spread across multiple years – peaking at an estimated SG$1 billion (US$772 million) per annum between 2027 and 2028.
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