[RAM] RAM Ratings affirms Genting Group's AA1 corporate ratings; cautions limited debt headroom

RAM Ratings has affirmed the AA₁/Stable/P1 corporate credit ratings of Genting Berhad (Genting or the Group) and Genting Malaysia Berhad (GenM) as well as the issue ratings of their debt programmes (Table 1). GenM’s ratings reflect close operational integration with Genting and our expectation of a ‘very high’ likelihood of parental financial support if needed.

The ratings consider Genting’s robust business profile, underpinned by its diversified and leading gaming and leisure market footprint in Malaysia, Singapore and a prominent presence in the northeastern US video gaming machine market. The Group’s operations in plantations, power generation, property and oil and gas mitigate some degree of sector concentration risk.

In our review, we have assessed the impact of potential material financial outlays for the proposed privatisation of GenM. In our view, a full privatisation of GenM is unlikely at the current offer price. Assuming a more moderate take up rate for this debt-funded privatisation, coupled with other planned capex and investments, our projections indicate the Group’s net debts to rise above RM27 bil in the period up to fiscal 2027. This would result in net gearing ratios exceeding 0.50 times while its funds from operations (FFO) net debt coverage may dip below 0.35 times, over the next three years. At these levels, Genting’s debt metrics would be strained but still within the tolerance limit of its current rating.

That said, we caution that these metrics leave little headroom for the Group to fund any other major investments. In particular, RAM’s financial projections have yet to factor the potential outlays in relation to Resorts World New York City’s bid for a downstate casino license in New York. RAM will reassess the financial impact on the Group’s credit profile if it successfully obtains the license. GenM’s proposed sale of Empire Resorts Inc’s non-gaming assets for USD525 mil, which should help alleviate some pressure on its balance sheet is also not factored into our projections for now.  

In affirming the rating, we take comfort in Genting’s strong cashflow generation and liquidity to support its increased debt load and debt servicing capacity. Genting’s revenue and earnings should improve more meaningfully in fiscal 2026 and 2027.  Performance at Resorts World Las Vegas (estimated to contribute 13% to Group revenue in fiscal 2024) should gradually ramp up, after the March 2025 resolution of the regulatory investigation by the Nevada Gaming Control Board. Upside is also expected from the phased opening of new attractions at Resorts World Sentosa (contribute 31% to Group revenue in fiscal 2024) under its SDG6.8 bil redevelopment.



 

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ben@ram.com.my

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