International rating agency S&P Global Ratings recently adjusted the rating outlook for Malaysia's Genting Group due to ongoing risks associated with substantial capital investments in New York and Singapore, downgrading it from stable to "negative". This adjustment coincides with Genting New York's subsidiary winning a full casino license in New York State, compounded by the expansion pressures of the Singapore project, sparking industry concerns about its financial resilience. For more details, refer to the detailed tracking reports on the PASA official website.
Increased Capital Expenditure Pressure with Projects in the US and Singapore
In New York, Genting New York's subsidiary has just secured a full casino license for Resorts World New York City in Queens, planning a $5.5 billion investment to upgrade the existing facility to a full-scale casino with up to 6000 slot machines and 800 gaming tables, plus a one-time upfront fee of $600 million to lock in a 30-year license. In Singapore, Genting Singapore is advancing a $5.3 billion expansion plan for Resorts World Sentosa, aiming to build a waterfront complex including two luxury hotels and a Minions theme park, with the goal of returning visitor numbers to pre-pandemic levels. However, its license will only be renewed for two years in November 2024, one year shorter than the usual term, due to underperformance from 2021-2023.
Setbacks in Privatization Process and Leverage Risk Concerns
To support the development of the New York project, Genting Group had attempted to privatize its subsidiary Genting Malaysia (GENM). By the acquisition deadline of December 1, the shareholding ratio increased from less than 50% to 73.13%, just shy of the 75% threshold for privatization delisting. S&P bluntly stated that this "increase in risk appetite" has reduced the predictability of the group's leverage ratio, especially if privatization is pushed forward by adding new debt, potentially delaying leverage ratio repair. It's worth noting that Genting Group's business footprint is not small, including projects in the US and Singapore, as well as the flagship resort in Kuala Lumpur, Resorts World Las Vegas, and over 30 provincial casinos in the UK.
S&P Warns of Financial Outlook, Debt Reduction Key
S&P's forecast is quite straightforward: Genting Group's capital expenditure in 2026 will be twice that of 2025's 60 million ringgit, and annual spending will exceed 80 million ringgit until 2030, while profit growth may not keep up with the spending pace. Over the next three years, the group's free cash flow is expected to remain negative, with debt potentially climbing from 21 billion ringgit in 2024 to 35 billion ringgit in 2028, and leverage ratio possibly falling below 20% before 2027. In response, S&P believes the group might cut dividends and accelerate the sale of land in Biscayne Bay, Miami, but these measures may not be sufficient, and other debt reduction methods need to be considered.
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