— 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
— 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
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
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.