Research Update: SKYCITY Entertainment Group 'BBB-' Rating Affirmed; Outlook Remains Stable

SKYCITY Entertainment Group Ltd. (SkyCity) is facing cyclically lower gaming revenues at a time of elevated regulatory costs and capital expenditure (capex). Although we expect the company's credit metrics to remain within rating tolerances, rating headroom will be limited over the next two years. In this regard, we expect debt-to-EBITDA ratio to peak at about 2.9x in fiscal 2024 (end June), before reducing toward 2.0x by fiscal 2026. We affirmed our 'BBB-' long-term issuer credit rating on SkyCity. At the same time, we affirmed the 'BBB-' long-term issue ratings on the company's debt. The stable outlook reflects our view that SkyCity is taking creditor-friendly actions to avoid downward pressure on the rating by prioritizing debt reduction over the next two

...- SKYCITY Entertainment Group Ltd. (SkyCity) is facing cyclically lower gaming revenues at a time of elevated regulatory costs and capital expenditure (capex). - Although we expect the company's credit metrics to remain within rating tolerances, rating headroom will be limited over the next two years. In this regard, we expect debt-to-EBITDA ratio to peak at about 2.9x in fiscal 2024 (end June), before reducing toward 2.0x by fiscal 2026. - We affirmed our '###-' long-term issuer credit rating on SkyCity. At the same time, we affirmed the '###-' long-term issue ratings on the company's debt. - The stable outlook reflects our view that SkyCity is taking creditor-friendly actions to avoid downward pressure on the rating by prioritizing debt reduction over the next two fiscal years....

Research Update