Research Update: Melco Resorts And Studio City Ratings Remain On CreditWatch Negative Amid Continued Travel Restrictions

The disruption from COVID-19 on Macau-based Melco Resorts&Entertainment Ltd. (MLCO) is greater than our initial expectations in early February. MLCO has more than sufficient liquidity for its ongoing needs for at least 10 months, in our view, and we believe a meaningful recovery in 2021 is still possible, assuming travel restrictions are gradually lifted starting in June. On April 20, 2020, S&P Global Ratings kept all of its ratings on MLCO's two major operating subsidiaries in Macau, Melco Resorts (Macau) Ltd. (MRM) and Studio City Co. Ltd., on CreditWatch with negative implications. The 'BB' long-term issuer credit rating on MRM and 'BB-' long-term issuer credit rating on Studio City were first placed on CreditWatch on Feb. 6, 2020.

...- The disruption from COVID-19 on Macau-based Melco Resorts & Entertainment Ltd. (MLCO) is greater than our initial expectations in early February. - MLCO has more than sufficient liquidity for its ongoing needs for at least 10 months, in our view, and we believe a meaningful recovery in 2021 is still possible, assuming travel restrictions are gradually lifted starting in June. - On April 20, 2020, S&P Global Ratings kept all of its ratings on MLCO's two major operating subsidiaries in Macau, Melco Resorts (Macau) Ltd. (MRM) and Studio City Co. Ltd., on CreditWatch with negative implications. The '##' long-term issuer credit rating on MRM and '##-' long-term issuer credit rating on Studio City were first placed on CreditWatch on Feb. 6, 2020. - We aim to resolve the CreditWatch placement when we have more information on the extent and the impact of COVID-19. We may lower the ratings if we believe travel restrictions will last well into the third quarter and MLCO cannot reduce its debt leverage...

Research Update