Home » Stock Market News » TEXT-S&P Rts LVSC’s Subsidiary, Marina Bay Sands’ Facs ‘BBB’

TEXT-S&P Rts LVSC’s Subsidiary, Marina Bay Sands’ Facs ‘BBB’

Marina Bay Sands Pte. Ltd., a Singapore-based subsidiary

of Las Vegas Sands Corp. (LVSC), recently closed a refinancing

of its senior secured credit facilities.

— We are assigning our ‘BB+’ corporate credit rating to

Marina Bay Sands and our ‘BBB‘ issue and ‘1’ recovery ratings to

Marina Bay Sands’ new Singapore dollar (S$) 5.1 billion credit

facilities.

— The positive outlook reflects our view that a higher

rating on LVSC is possible over the next several quarters, based

on our current performance expectations across its global

portfolio of properties.

NEW YORK (Standard Poor’s) June 28, 2012–Standard

Poor’s Ratings Services said today that it assigned its ‘BB+’

corporate credit rating to Singapore-based Marina Bay Sands Pte.

Ltd. (MBS), a subsidiary of Las Vegas Sands Corp. (LVSC;

BB+/Positive/–). The outlook is positive.

We also assigned MBS’ S$5.1 billion credit facilities our

‘BBB’ issue-level rating (two notches higher than our corporate

credit rating) and a recovery rating of ‘1’, indicating our

expectation for very high (90% to 100%) recovery for lenders in

the event of a default.

The credit facilities are composed of a S$500 million

revolving credit facility due Dec. 25, 2017 and a S$4.6 billion

term loan due June 25, 2018. MBS will use proceeds from its new

facilities to refinance existing debt, pay fees, expenses and

accrued interest, and for general corporate purposes.

All other existing ratings for the Las Vegas Sands Corp.

family of companies remain unchanged.

“Our corporate credit rating on MBS reflects the overall

credit quality of the LVSC family of companies and is aligned

with our ‘BB+’ corporate credit rating on LVSC,” said Standard

Poor’s credit analyst Melissa Long.

“Despite the distinct financing structures at LVSC’s U.S.,

Macau, and Singapore subsidiaries, we consider the consolidated

entity when assessing LVSC’s credit quality.”

We deem the strategic relationship between the parent and

each subsidiary as an important factor that has a bearing on the

credit quality of the overall consolidated entity. We consider

MBS to be a core subsidiary of LVSC as we believe that the

company is integral to LVSC’s current identity and future

strategy.

MBS is wholly owned through various entities of LVSC and

shares a similar brand with other group entities. Additionally,

MBS represented close to half of LVSC’s consolidated property

level EBITDA for the 12 months ended March 31, 2012, which in

our view is significant.

Thus, despite credit measures on a standalone basis that

might otherwise be supportive of a higher rating, we are

assigning MBS a corporate credit rating at the same level as our

corporate credit rating on LVSC.

The positive outlook reflects our view that a higher rating

is possible over the next several quarters, based on our current

performance expectations. To raise the rating to ‘BBB-‘, we

would expect leverage to be generally closer to 3x, though we

would be comfortable with it temporarily spiking to the high-3x

area to fund development projects.

In the event of a strong ramp-up of Sands Cotai Central, we

believe an upgrade to ‘BBB-‘ is possible, as we would expect

leverage to improve to below 2.5x by early 2013. An

investment-grade rating on Las Vegas Sands, however, would also

require management to publicly articulate a financial policy

around its tolerance for leverage that is aligned with our

leverage threshold at a ‘BBB-‘ rating.

In addition, while we are unclear when the aforementioned

lawsuits and investigations would be resolved and what effect,

if any, a potential judgment would have on credit quality, these

issues may weigh on upgrade potential until we have further

clarity.

A revision of the rating outlook to stable or a downgrade

could result from performance meaningfully below our

expectations, or from the company taking a more aggressive

posture toward additional development opportunities, resulting

in a sustained spike in leverage to above 4x.

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