SKYCITY Entertainment Group Ltd.

The CreditWatch negative placement reflects our view that operational closures across Skycity's key casino assets, together with the funding of significant capital expenditure, may cause Skycity's adjusted debt-to-EBITDA ratio to remain materially above 3.0x over the next one to two years. We will continue to monitor Skycity's operational and capital management initiatives over the near term. We could lower the rating if we forecast adjusted debt to EBITDA will sustain above 3.0x over the next one to two years. Based on our current expectations regarding the likely effect of casino closures, we do not expect a downgrade, if any, to exceed one notch. We could resolve the CreditWatch and affirm the 'BBB-' issuer credit rating with a stable outlook if

...We believe COVID-19-related measures may compromise Skycity Entertainment Group Ltd.'s ability to maintain leverage in line with the '###-' rating. The group is undertaking significant development activity at its Adelaide casino and the New Zealand International Convention Centre (NZICC). The developments amid the COVID-19 pandemic are likely to test the company's capital allocation framework, including its ability to restore adjusted debt to EBITDA below 3.0x. In our view, the group has a solid track record of prudent balance sheet management and ratings stability. The company is publically committed to maintaining the '###-' rating, which we believe implies that it will take all reasonable actions to protect the interests of creditors. Levers to support balance sheet health include recalibrating shareholder returns, noncore assets sales, as well as near-term operating and capital expenditure decisions. The company has previously raised equity to support its balance sheet. Skycity's long-term...

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