Asia Pacific gaming firms face longer leverage: Fitch
KUALA LUMPUR: Prolonged weakness in revenue recovery among Asia Pacific gaming operators is keeping leverage elevated for longer, according to Fitch Ratings.
Asia Pacific gaming firms face longer financial strain, as prolonged revenue recovery issues keep leverage elevated, according to Fitch Ratings. Most of the region's gaming operators covered by Fitch have had their ratings downgraded recently, but the downgrades are primarily due to individual companies rather than a general sector decline.
Higher Ebitda leverage reflects slower-than-anticipated earnings growth amidst significant capital expenditure commitments, Fitch reported. Genting Bhd and Genting Malaysia Bhd are expected to continue deleveraging, contingent on the Ebitda recovery of their New York casino. SJM Holdings Ltd aims to reduce leverage through restructuring costs post-2026, while Tabcorp Holdings Ltd shows a more favorable trajectory, having reduced net leverage below 2.0 times in recent years.
Tabcorp's strategy aligns with its long-term target of maintaining net leverage under 2.5 times. Universal Entertainment Corp's downgrade to CCC+ highlights deteriorating operating performance due to structural headwinds, with weaker earnings expectations and uncertain recovery prospects. Despite these company-specific challenges, the region's regulatory protection remains a key credit strength, with high barriers to entry from exclusive or monopoly licensing structures supporting the creditworthiness of most rated issuers.
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