Moody’s Ratings lowered its rating on Malaysian conglomerate Genting Bhd and two subsidiaries on Monday following a review that began on 16 October.
The credit agency lowered its rating on the parent company from Baa2 to Baa3. Analyst Anthony Prayugo attributed the downgrade to several factors, including an “already-weak position due to prolonged deleveraging amid slower-than-expected earnings recovery. [Genting Bhd] is further strained by increased debt to fund its takeover offer for Genting Malaysia Bhd and expected spending following the potential award of a downstate New York City commercial casino licence.”
Starting in October, Genting offered shareholders RM2.35 (US$.57) per share for the 50.64% of Genting Malaysia (GENM) shares it did not then control. By the 1 December deadline, it increased its stake to 73.13%, short of the 75% needed to privatise the unit and delist it from Bursa Malaysia. However, Genting persisted, purchasing additional shares on the open market. As of 4 December, it owned just under 73.80% of GENM shares.
In search of capital for New York City project
Genting said control of GENM would give it “the financial strength and network to support” the redevelopment of Resorts World New York if its licence bid is approved. Last week, one state board OK’d the application pending a review of three recommended licences that the New York State Gaming Commission will complete by 31 December.
Genting plans to invest $5.5 billion to turn the Queens slot parlor into a full-scale casino resort. It said the reconfigured venue would feature a 500,000-square-foot gaming floor with 800 table games and up to 6,000 slot machines.
To secure a 30-year licence, Genting New York offered an upfront fee of $600 million. That’s 20% more than the $500 million minimum required.
Outlook stable on Genting parent, subsidiaries
Moody’s maintains a stable outlook on both the parent company and its subsidiaries.
That outlook “reflects our expectation that earnings will continue to improve at Genting’s operations in Singapore and Las Vegas”, Moody’s stated. The agency further expects that “execution risk for [a] downstate New York City project remains minimal such that the project will be earnings accretive by the second half of 2026, supporting a recovery in credit metrics”. Finally, it anticipates that the group will not undertake any additional debt-funded expansion projects.
Moody’s has lowered the ratings of Genting Bhd, Genting Overseas Holdings and Genting Singapore due to higher debt and “weaker credit quality”.