Wynn Resorts Ltd and its subsidiaries, including Wynn Macau Ltd, have received a first-time “BB-” Issuer Default Rating from Fitch, with a stable outlook. Fitch anticipates Wynn Resorts’ EBITDAR leverage to improve significantly from around 7x in 2023 to the low-5x range by 2025. This positive shift is primarily attributed to the ongoing recovery in Macau, as outlined in Fitch’s recent note.
Macau’s Role as a Short-Term Catalyst:
Fitch emphasizes Macau’s pivotal role as the main driver for short-term optimism. The removal of travel restrictions in early 2023 is expected to lead to a robust rebound in Macau’s gaming revenues. Fitch forecasts a mid-teens revenue growth in 2024, with EBITDAR margins improving by 100 to 150 basis points. Mass market baccarat, particularly in the premium mass segment, is on the path to full recovery, exceeding 2019 levels in some aspects.
Credit Improvement Factors:
The “BB-” Issuer Default Rating reflects Fitch’s confidence in Wynn Resorts’ high-quality gaming assets and the anticipated improvement in Macau’s gaming market. Wynn’s strong performance in Las Vegas, coupled with robust liquidity, positions the company for further credit improvement. The note underscores the positive impact on credit metrics, emphasizing the potential for near-term capital project funding and debt reduction.
Macau’s Rapid Rebound and Market Focus:
Fitch notes that Wynn Palace has responded impressively to the recovery, with mass market revenues and property EBITDAR margins for 3Q23 surpassing 2019 levels. Wynn Macau has experienced a slightly slower rebound, attributed to its shift away from the VIP market towards a greater focus on the premium mass market.
Visitation and Airline Capacity:
Despite the rapid growth in gaming revenues, visitation and airline capacity remain below 2019 levels. Fitch anticipates that the rebound in these metrics will serve as an additional source of revenue growth in the near term. As these key indicators improve, they are expected to further support Wynn Resorts’ overall performance.
Outlook Despite Ongoing Capital Projects:
Fitch acknowledges the existence of significant capital projects in various locations, including Macau, Las Vegas, Boston, and the United Arab Emirates. Despite these commitments, the agency remains optimistic about Wynn’s credit continuing to improve.
Wynn Resorts’ positive outlook, as assessed by Fitch, is underpinned by the recovery in Macau, strong results in Las Vegas, and strategic market focus. The anticipation of improved credit metrics and the ability to navigate ongoing capital projects contribute to Fitch’s confidence in Wynn Resorts’ financial trajectory. As Macau’s gaming market continues to rebound, Wynn Resorts appears poised for sustained growth and enhanced creditworthiness.