{"id":207597,"date":"2022-04-01T03:01:43","date_gmt":"2022-04-01T10:01:43","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=207597"},"modified":"2022-04-01T12:43:18","modified_gmt":"2022-04-01T19:43:18","slug":"mgm-credit-rating-trimmed-by-moodys-investors-service","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/mgm-credit-rating-trimmed-by-moodys-investors-service\/","title":{"rendered":"MGM Credit Rating Lowered Further Into Junk Territory by Moody\u2019s"},"content":{"rendered":"

Moody\u2019s Investors Service has trimmed MGM Resorts International\u2019s (NYSE:MGM) credit rating to \u201cB1\u201d from \u201cBa3,\u201d moving the casino operator\u2019s grade one notch further into non-investment grade territory.<\/p>\n

\"MGM
The MGM lion at MGM Grand on the Las Vegas Strip, seen above. Moody’s lowered the operator’s credit rating. (Image: Nevada Independent<\/em>)<\/figcaption><\/figure>\n

Among other issues, Moody\u2019s cites ongoing weakness in Macau as one of the reasons for the downgrade. MGM owns almost 56 percent of MGM China.<\/p>\n

The downgrade reflects the slow recovery in Macau and the high leverage level the company is expected to carry following a number of deals completed or to be completed soon,\u201d<\/strong> said Moody\u2019s.<\/p><\/blockquote>\n

The ratings agency called on MGM arrived just days after Morgan Stanley expressed<\/a> concern about the cash burn rates of five of the six Macau concessionaires. Sands China and MGM China have about three-quarters (nine months) worth of cash to survive at current burn rates.<\/p>\n

However, the Las Vegas-based company has $4.8 billion in cash and a $1.67 billion undrawn credit revolver as of 2021, while the Macau operator has total liquidity of $1.68 billion.<\/p>\n

Moody\u2019s Questions MGM Transactions<\/h2>\n

While MGM has one of the strongest balance sheets in the gaming industry, and Wall Street largely praises the company\u2019s asset-lite model, Moody\u2019s voices concerns about some of the company\u2019s transactions.<\/p>\n

Those include the operator\u2019s $2.12 billion purchase of a 50% interest in CityCenter<\/a>, the $1.6 billion acquisition of Cosmopolitan\u2019s<\/a> casino and hotel operating rights, and the divestment of MGM Growth Properties (NYSE:MGP) to VICI Properties (NYSE:VICI).<\/strong><\/p>\n

While Moody\u2019s highlights vibrancy in Las Vegas and MGM\u2019s regional portfolio, the research firm notes earnings from those sources won\u2019t be enough to offset rising leverage.<\/p>\n

\u201cHowever, the earnings are not enough to offset Moody’s view that the planned transactions are leveraging, and that MGM will maintain leverage significantly above pre-pandemic levels,\u201d notes Moody\u2019s. \u201cLeverage is expected to be maintained over 7x debt-to-EBITDA in 2023, above our 6x downgrade threshold level.\u201d<\/p>\n

MGM Not the Only One<\/h2>\n

Macau acting as a thorn in the side of gaming operators has been nothing new since the start of the coronavirus pandemic.<\/p>\n

The gaming sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment,\u201d adds Moody\u2019s. “More specifically, MGM remains vulnerable to a renewed spread of the outbreak. MGM also remains exposed to discretionary consumer spending that leave it vulnerable to shifts in market sentiment in these unprecedented operating conditions.\u201d<\/p><\/blockquote>\n

To be fair to the Bellagio operator, it\u2019s not the only casino giant to recently endure a credit downgrade. In February, Standard & Poor\u2019s (S&P) stripped Las Vegas Sands (NYSE:LVS) of an investment-grade rating, citing Macau woes.<\/a><\/p>\n

Sands was lowered by S&P to \u201cBB+,\u201dor one notch into junk territory, from \u201cBBB-,\u201c with a negative outlook.<\/strong><\/p>\n

\u201cWe are willing to look out to 2023 for LVS to restore credit measures because of the company\u2019s high-quality asset portfolio and our belief that its gaming markets and assets will eventually recover along with leisure, business, and group travel,\u201d said S&P in its report on Sands.<\/p>\n","protected":false},"excerpt":{"rendered":"

Moody\u2019s Investors Service has trimmed MGM Resorts International\u2019s (NYSE:MGM) credit rating to \u201cB1\u201d from \u201cBa3,\u201d moving the casino operator\u2019s grade one notch further into non-investment grade territory. Among other issues, Moody\u2019s cites ongoing weakness in Macau as one of the reasons for the downgrade. MGM owns almost 56 percent of MGM China. The downgrade reflects […]<\/p>\n","protected":false},"author":46,"featured_media":207599,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[62,10],"tags":[],"acf":[],"yoast_head":"\nMGM Credit Rating Trimmed By Moody's Investors Service<\/title>\n<meta name=\"description\" content=\"Moody's lowers MGM credit ratings on Macau, transaction concerns.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/mgm-credit-rating-trimmed-by-moodys-investors-service\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"MGM Credit Rating Trimmed By Moody's Investors Service\" \/>\n<meta property=\"og:description\" content=\"Moody's lowers MGM credit ratings on Macau, transaction concerns.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/mgm-credit-rating-trimmed-by-moodys-investors-service\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2022-04-01T10:01:43+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-04-01T19:43:18+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/03\/MGM2.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2560\" \/>\n\t<meta property=\"og:image:height\" content=\"1707\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/mgm-credit-rating-trimmed-by-moodys-investors-service\/\",\"url\":\"https:\/\/www.casino.org\/news\/mgm-credit-rating-trimmed-by-moodys-investors-service\/\",\"name\":\"MGM Credit Rating Trimmed By Moody's Investors Service\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/mgm-credit-rating-trimmed-by-moodys-investors-service\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/mgm-credit-rating-trimmed-by-moodys-investors-service\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/03\/MGM2.jpg\",\"datePublished\":\"2022-04-01T10:01:43+00:00\",\"dateModified\":\"2022-04-01T19:43:18+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Moody's lowers MGM credit ratings on Macau, transaction concerns.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/mgm-credit-rating-trimmed-by-moodys-investors-service\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/mgm-credit-rating-trimmed-by-moodys-investors-service\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/mgm-credit-rating-trimmed-by-moodys-investors-service\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/03\/MGM2.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/03\/MGM2.jpg\",\"width\":2560,\"height\":1707,\"caption\":\"The MGM lion at MGM Grand on the Las Vegas Strip. 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