SKYCITY Entertainment Group Ltd.

The stable outlook assumes that SKC will manage its major developments in Auckland and Adelaide within rating tolerances over the next few years. S&P Global Ratings forecasts the group's debt to EBITDA will increase to the mid-to-high 2x level during the peak of the group's development phase over the year ending June 30, 2020. However, in the longer term, we expect its debt to EBITDA will track at about the mid-2x level. Downward rating pressure could emerge if the development costs of SKC's projects in Auckland or Adelaide were to increase significantly, sustaining its debt to EBITDA at more than 3x. Alternatively, a material adverse change to the licensing or regulatory environments in which SKC operates, particularly in Auckland, could

...SKYCITY Entertainment Ltd. (SKC)'s stable mass-market gaming operations from its Auckland asset and capital lighter strategy should support its resilience during a period of significant capital expenditure (capex).In our opinion, SKC's stable cash flow underpinned by its monopoly position in New Zealand and additional cash inflow from recent noncore asset sales should build its balance-sheet headroom. Our forecasts expect the company's debt-to-EBITDA ratio to be below 3.0x at the peak of its development program in 2020. The group has supportive financial policies at the '###-' rating level and prudent capital management.In our view, the group remains committed to maintaining the '###-' rating, with a company net debt-to-EBITDA policy of 2.0x¡2.5x over the next two years at least. We believe SKC will appropriately manage its capital and the execution risks associated with the group's large development program....

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