Posted on: November 19, 2024, 03:01h.
Last updated on: November 19, 2024, 03:19h.
Las Vegas Sands’ (NYSE: LVS) Marina Bay Sands is rumored to be seeking a $9 billion loan to pay for expansion plans at the prestigious Singapore casino resort.
Should the operator procure financing at or close to that amount, it would be the largest extension of corporate credit in Singapore in recent years. Unidentified sources close to the matter told Bloomberg News that DBS Group Holdings Ltd., Malayan Banking Bhd., Oversea-Chinese Banking Corp., and United Overseas Bank Ltd. are working on the loan and are seeking contributions from other financial firms.
The sources said the loan would have a seven-year term, but particulars such as interest rates weren’t revealed. Las Vegas Sands, which is the parent of the holding company that controls Marina Bay Sands, has investment-grade credit marks at the three major ratings agencies, but by just one notch.
In an October report, Moody’s Investors Service noted it was possible the operator “will continue to pursue further and significant global casino resort development opportunities that will likely be funded largely with debt, leading to temporary leveraging.” The Singapore loan would appear to fit that bill, but Moody’s also acknowledged Sands’ retained cash flow to net debt ratio could jump to 33% over the next 12 to 18 months, adding the gaming company has the financial resources to support its dividend and share repurchase plan.
Singapore Expansion Costs Aren’t Cheap
The report regarding Marina Bay Sands potentially looking for $9 billion in credit arrived nearly a year after similar speculation surfaced that LVS was looking for $7.5 billion to enhance and add to the Singapore integrated resort.
The company denied the 2023 report and it has yet to comment on the latest article on the matter. However, it’s clear tight labor pools and global materials shortages are likely to contribute to higher costs of expansion in the city-state. Originally, MBS expansion, including new guest rooms, convention and meeting space, and a 15K-seat entertainment arena, was expected to cost $3.37 billion.
Sources told Bloomberg that if Marina Bay Sands is successful in procuring a loan, some of the proceeds would be directed to refinancing a $2.98 billion taken out in 2019, with the remainder going to expansion. That implies costs for additions at the property haven’t increased significantly in the past year.
Should the loan be extended, it would be the largest syndicated financing in the history of Singapore, topping the record set in 2012 by Thai billionaire Charoen Sirivadhanabhakdi whose conglomerate acquired a Singaporean consumer staples company.
MBS Investments Can Pay Dividends
While it won’t be inexpensive to expand MBS, those expenditures could offer the operator and its shareholders an attractive long-term return on investment. The venue is one of just two integrated resorts in Singapore, and it’s one of the most profitable casino hotels in the world, luring visitors from across Asia.
The point about tourism is important because regional competition is increasing. MBS expansion is expected to be completed by 2031. Before that, MGM Osaka is expected to open and several casino hotels could be up and running in Thailand.
Currently, Singapore is the third-largest gaming market in the world based on gross gaming revenue (GGR), but some analysts believe Thailand will eventually take that spot because it will allow more casinos.
