Research Update: Melco Resorts And Studio City Ratings Affirmed Despite Lower Gaming Revenue Forecast; Outlook Negative

Melco Resorts&Entertainment Ltd. (MLCO) will likely see a slower recovery across its casino resorts in Macau and the Philippines due to the ongoing pandemic and its effect on travel. We have recently lowered our forecast for Macau's gross gaming revenue (GGR) for 2021 to 30%-40% below 2019 levels (compared with our previous estimate of 10%-20%). That said, we still see pent-up demand for casinos and continue to expect a full recovery in 2022. MLCO achieved EBITDA breakeven in the fourth quarter of 2020, mainly supported by the return of premium mass players and cost controls. We continue to expect the company's adjusted debt-to-EBITDA will decline below our 3.5x downgrade threshold by late 2021 or early 2022 on a

...- Melco Resorts & Entertainment Ltd. (MLCO) will likely see a slower recovery across its casino resorts in Macau and the Philippines due to the ongoing pandemic and its effect on travel. We have recently lowered our forecast for Macau's gross gaming revenue (GGR) for 2021 to 30%-40% below 2019 levels (compared with our previous estimate of 10%-20%). That said, we still see pent-up demand for casinos and continue to expect a full recovery in 2022. - MLCO achieved EBITDA breakeven in the fourth quarter of 2020, mainly supported by the return of premium mass players and cost controls. We continue to expect the company's adjusted debt-to-EBITDA will decline below our 3.5x downgrade threshold by late 2021 or early 2022 on a run-rate basis. - We are affirming our '##' long-term issuer credit rating on Melco Resorts (Macau) Ltd. (MRM) and '##-' long-term issuer credit rating on Studio City Co. Ltd. Both are MLCO operating subsidiaries. - The negative outlook on MRM and Studio City reflects our...

Research Update