Genting Bhd.

The stable outlook on GENT reflects our expectation that the company's credit quality will stabilize following the completion of a major investment cycle, while an operational recovery takes shape over the next two years. This is despite the group's delayed recovery in its operations from the pandemic. We expect Genting's FFO-to-debt ratio to improve to above 20% over the next two years. We may lower the rating on GENT if the group's leverage deteriorates such that the FFO-to-debt ratio remains below 20%, or the ratio of debt to EBITDA remains above 4x for a prolonged period. This could happen if: (1) GENT's market position declines; (2) COVID-19 related closures or capacity constraints are longer than we expect; (3) RWLV's operational

...We expect Genting Bhd's (GENT) operations to normalize only from 2023 because the group has been hit hard by COVID-19. The slow recovery hinges on the continued travel and social restrictions in Southeast Asia, mainly Malaysia. As a result, Genting Malaysia Bhd.'s (GENM) principal asset, Resorts World Genting (RWG), has been closed since May 2021. Given ongoing uncertainties surrounding the delta variant and a slower-than-expected recovery of operations in the region, we expect Genting group companies' EBITDA to reach pre-pandemic levels only in 2023. In our view, GENT's elevated debt levels and slower recovery have weakened its financial profile. We forecast the group's debt-to-EBITDA ratio will remain 6.0x-6.2x in 2021 and 3.1x-3.3x in 2022, and its ratio of funds from operations (FFO) to debt will be 19%-21% in 2022 and 26%-28% in 2023. Earnings from RWLV are likely to meaningfully contribute from 2022. In our view, the better-than-expected recovery of Genting New York LLC (GENNY) and...

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