Research Update: Melco Resorts And Studio City Ratings Placed On CreditWatch Negative As Macau Visitation Plunges On Coronavirus Outbreak

We expect visitation to the Macau gaming market to remain depressed until the new coronavirus, which first appeared in China, is contained. With the majority of its EBITDA generated in Macau, MLCO's debt-to-EBITDA ratio is likely to exceed 3.5x in 2020 if the impact of the epidemic lasts into the second or third quarter of this year. On Feb. 6, 2020, S&P Global Ratings placed all its ratings on MLCO's two major operating subsidiaries in Macau, Melco Resorts (Macau) Ltd. (MRM) and Studio City Co. Ltd., and their debt on CreditWatch with negative implications. We aim to resolve the CreditWatch once more information emerges to assess the potential impact of the coronavirus on Macau's visitation and gaming revenue in 2020

...- We expect visitation to the Macau gaming market to remain depressed until the new coronavirus, which first appeared in China, is contained. - With the majority of its EBITDA generated in Macau, MLCO's debt-to-EBITDA ratio is likely to exceed 3.5x in 2020 if the impact of the epidemic lasts into the second or third quarter of this year. - On Feb. 6, 2020, S&P Global Ratings placed all its ratings on MLCO's two major operating subsidiaries in Macau, Melco Resorts (Macau) Ltd. (MRM) and Studio City Co. Ltd., and their debt on CreditWatch with negative implications. - We aim to resolve the CreditWatch once more information emerges to assess the potential impact of the coronavirus on Macau's visitation and gaming revenue in 2020 and 2021, and therefore on MLCO's debt leverage....

Research Update