...December 13, 2021 HONG KONG (S&P Global Ratings) Dec. 13, 2021--The potential closure of VIP junket rooms at the Macau properties of Melco Resorts & Entertainment Ltd. (MLCO) will have a modest financial impact and add another wrinkle to the group's recovery trajectory. S&P Global Ratings estimates VIP customers contribute about 10% to Macau EBITDA, and that the loss of this segment could increase MLCO's adjusted debt-to-EBITDA ratio to 3.7x-4.0x in 2023. That's higher than our current forecast of 3.3x-3.7x, and closer to the 4.5x downgrade trigger for our ratings on MLCO's operating subsidiaries Melco Resorts (Macau) Ltd. (##-/Negative/--) and Studio City Co. Ltd. (B+/Negative/--). The strain on MLCO will increase if the weakness in the VIP segment leads to lower demand in the high-end mass segment, given some players overlap. Crackdown in VIP junkets will lower credit availability to this group of customers. Sentiment among the high-end mass players could also be affected. That said,...
