Genting Bhd.

We estimate that GENT has incurred around US$600 million to September 2018, with the remaining disbursements to be over the next 24 months to completion. While we believe GENT has ample funds to cover RWLV's costs over the next 12 to 18 months, we expect the company's asset-level debt to be introduced in the project's financing, further increasing GENT's serviceable debt obligations. As such, we expect to see a deterioration in GENT's holding company interest coverage ratios, though remaining adequately healthy and buttressed by GENT's ample cash holdings. Our rating outlook on GENT is stable. We expect GENT's gaming operations, which anchor the rating, to continue to generate broadly stable earnings and resilient cash flows over the next 24 months.

...Rising competitive and regulatory headwinds alongside GENT's outsized expansion ambitions offset the company's ample cash flows. At the holding company level, Genting Bhd. (GENT) derives over two-thirds of its annual cash flows from the management fees, brand licensing fees, and dividends it receives from Genting Malaysia (GENM) and other subsidiaries. These subsidiaries' stable operations and strong competitive positions underpin GENT's resilient cash flows. While GENM is the largest cash contributor to date, the Malaysian government's decision to significantly raise gaming taxes in the country from 2019 in our view may likely reduce GENM's absolute dividend payout in future years, with Genting Singapore (GENS) becoming the group's top cash contributor. While the reduction from GENM's dividend may likely be material, GENT's overall cash inflows should be sufficient to cover its debt service. Nevertheless, the competitive landscape in the South-east Asian gaming industry is intensifying....

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