Casino operator Genting Malaysia Berhad should be able to “deleverage in one or two years” thanks to gradual recovery in demand following the pandemic, the maintenance of financial discipline and operating flexibility, coupled with moderating CapEx, says Fitch Ratings Inc.

On the outgoings side, “Genting Malaysia budgets MYR1 billion (US$242.0 million) of capital expenditure in 2021, and MYR500 million to MYR600 million annually thereafter, mainly for maintenance CapEx,” noted Fitch.

The institution noted Genting Malaysia was “on track” to open an outdoor theme park at its flagship property – Resorts World Genting – as well as a hotel at Resorts World New York City, “in mid-2021”.

“Genting Malaysia expects the theme park to draw an additional 1.5 million to 2 million visitors per year, and generate an additional MYR400 million to MYR500 million in revenue,” stated Fitch.

Fitch has issued a ‘BBB’ rating investment grade regarding some proposed U.S. dollar notes from Genting Malaysia. The institution also said Genting Malaysia’s long-term issuer default was ‘BBB’, with a negative outlook.

The notes are rated at the same level as Genting Malaysia’s issuer default rating as they will constitute direct, unsecured and unsubordinated obligations of the company. The company plans to use the proceeds mainly to refinance debt, according to Fitch.

Genting Malaysia’s rating takes into consideration “its moderate linkage to its weaker parent, Genting Bhd… ‘BBB’/’negative’, and we rate Genting Malaysia based on the Genting Bhd’s consolidated credit profile and the outlook is aligned with that of Genting Bhd”, said Fitch.

The institution said the negative outlook “captures the risk of a slower gaming recovery from the pandemic impact than we forecast, such that Genting Bhd’s leverage is elevated for an extended period.”

Editing by Rachel Hu