Fitch Ratings has reduced its revenue expectations for Genting Malaysia, the operator of Resorts World Genting in Malaysia and casinos in New York and Europe, by around 5% on average for 2023 and 2024 due to a slower-than-expected recovery in the first half of the year. However, it maintained Genting Malaysia’s Long-Term Issuer Default Rating (IDR) at “BBB” with a stable outlook, citing strong domestic prospects and the support of its parent company, Genting Berhad. Fitch also placed the IDR of Genting New York LLC and its senior unsecured notes due 2026 on Rating Watch Negative, considering the risk associated with winning a full-scale casino license in downstate New York.
Revenue Expectations Cut:
Fitch Ratings has reduced its revenue expectations for Genting Malaysia by around 5% on average for 2023 and 2024 due to a slower-than-expected recovery in the first half of the year. Factors like heavy rainfall at the start of 2023 and a landslide in late 2022, hindering access to the resort, impacted revenue in 2022 and H1 2023, contributing to the decision to adjust revenue expectations.
Stable IDR and Outlook:
Despite the revenue expectations adjustment, Fitch maintained Genting Malaysia’s Long-Term Issuer Default Rating (IDR) at “BBB” with a stable outlook. The stability is attributed to a strong domestic outlook and the support of the company’s more diversified parent, Genting Berhad.
Potential Impact on New York Operations:
Fitch placed the IDR of Genting New York LLC and its senior unsecured notes due 2026 on Rating Watch Negative due to the risk associated with potentially not winning a full-scale casino license in downstate New York. The outcome could impact the company’s strategic importance and incentives for support, potentially leading to a downgrade of Genting New York’s IDR.
Fitch Ratings noted that the revenue growth for Genting Malaysia is expected to be driven by a steady increase in domestic traffic and higher international tourists, with the likely repair of the access road by 1H24 supporting the outlook.