The outlook of Macau casino operator SJM Holdings Ltd’s current corporate family credit rating, and the rating on its backed senior unsecured bonds, remains ‘stable’, says Moody’s Investors Service Inc. It adds that the gaming group’s present elevated level of financial leverage is mitigated by the growing earnings from SJM Holdings’ Cotai property, Grand Lisboa Palace, and by better cash flow.

That is according to the institution’s latest update issued on Tuesday.

The rating review was conducted through a rating committee session held on October 29. It concluded that relevant ratings should remain as they were. This was regarding SJM Holdings’ corporate family rating at ‘Ba3′; and senior unsecured bonds – issued by a linked entity, Champion Path Holdings Ltd and guaranteed by SJM Holdings – being held at ‘B1’.

Champion Path is a wholly owned subsidiary of SJM Holdings, according to the casino operator’s filings.

Moody’s stated, referring also to the sovereign-issuer rating of the Macau government: “The ratings reflect SJM’s established gaming operations in the Macau SAR, China (‘Aa3′ ‘negative’) with a history of more than 50 years and Macau’s good long-term growth prospects.”

Other supporting factors were the “expected improvement” in the casino firm’s “financial metrics because of growing earnings contribution from its… integrated resort in Cotai, Grand Lisboa Palace; and the company’s debt reduction, drive by improved cash flow.”

Grand Lisboa opened in July 2021, amid the Covid-19 pandemic, and has taken time to build its gaming and non-gaming businesses.

Moody’s said the recent positive factors it had identified, mitigated the gaming group’s current “elevated” financial leverage, as well as the risk associated with its “geographic concentration” in the home market of Macau, where gaming revenue trends were 온라인카지노 subject to policy changes not only from the city’s authorities but also from mainland China, according to the rating house.

SJM Holdings had nearly HKD26.97 billion (US$3.47 billion at current exchange rates) of debt as at June 30, according to its interim report filed in late September. As of that date, the group had HKD3.43 billion of cash, bank balances, short-term bank deposits and pledged bank deposits.

SJM Holdings is to announce its third-quarter earnings results on November 12.