Genting Malaysia to prop up New York casino interests in times of distress, says Fitch - IAG
Monday 25th January 2021
Ratings agency Fitch has warned that Genting Malaysia will likely be called upon, and respond, to provide additional funding to its US subsidiary Genting New York LLC should it continue to face "times of distress."
The potential for such capital injection was outlined in a Monday note from Fitch in which it assigned Genting New York - operator of Resorts World New York - an issuer default rating of "BBB-" with a negative outlook. The rating, Fitch said, was closely linked to parent company Genting Malaysia due to common management and the strategic importance of the US company to Genting Malaysia's long-term growth ambitions.
It also noted that Genting New York was similarly vital to Genting group's ultimate parent, Genting Berhad, with the New York property set to serve as a key feeder to its US$4 billion Resorts World Las Vegas development, due to open this year. Resorts World New York is a slot-only casino with around 6,500 video lottery terminals and electronic table games on offer.
"The strong overall linkage between Genting New York and Genting Malaysia is driven by their important strategic ties and moderate operating synergies," Fitch said.
"The group has made significant investments in the US, an important market to the group due to its diversification and growth initiatives. Genting is investing over US$4 billion in the new casino in Las Vegas, while Genting Malaysia has invested US$535 million in Genting New York to date.
"We believe support would be forthcoming to Genting New York due to their aligned interests. Genting New York's importance to Genting Malaysia is further accentuated by Resorts World New York's satisfactory pre-pandemic performance, as it is the largest casino in close proximity to New York City, its strong local market share and the longer-term potential of securing a table-game license after New York upstate casinos' exclusivity period ends in 2023."
Fitch has also assigned a "BBB-" rating to proposed unsecured notes to be issued by Genting New York and GENNY Capital Inc in order to refinance existing debt.