Las Vegas Sands Enters $1.5B Revolving Credit Agreement

Las Vegas Sands Credit Rating Could Be Hindered by Shareholder Rewards

Posted on: April 3, 2024 - Todd Shriber
www.casino.org/news/sands-credit-rating-could-be-hindered-by-shareholder-rewards/

Las Vegas Sands’ (NYSE: LVS) shareholder rewards efforts, including buybacks and dividends, could be headwinds to a credit ratings upgrade, according to Moody’s Investors Service.

Marina Bay Sands, cheating, Tan Kian Yi, baccarat

Singapore’s iconic Marina Bay Sands. Operator Las Vegas Sands could experience credit rating constraints due to shareholder rewards, says Moody’s. (Image: STB)

In reiterating a “Baa3” rating with a “stable” outlook on the casino operator, Moody’s said it expects Sands to continue paying dividends and repurchasing its shares — moves that could act as “credit constraints.” The Baa3 grade is three notches into junk territory on the Moody’s ratings scale. After suspending its quarterly payout in the early days of coronavirus pandemic, LVS restarted it last July, paying out $150 million to investors in the third and fourth quarters.

The stable outlook reflects our expectation that visitation and gaming revenues will continue to ramp up in 2024, enabling Las Vegas Sands to restore credit metrics to levels in line with our expectations for the Baa2 Sand China Ltd / Baa3 Las Vegas Sands senior unsecured ratings, including leverage in the low 3x range,” observed Moody’s.

Currently, Sands China doesn’t pay a dividend, making it one of three Macau operators not doing so, but analysts believe that company will be the next to rejoin the Macau dividend group. LVS also announced a $2 billion share repurchase program last October.

Expansion Could Also Hinder Sands Credit Rating

Moody’s noted Sands is likely to continue preserving ample liquidity, manage upcoming debt maturities, and possibly pare overall debt. However, leverage could increase should the operator prove successful in pursuit of various new projects.

Those include a New York City-area casino permit, a Texas integrated resort and the possibility of bidding on a Thailand casino should that country formally approve regulated gaming. Of those three, New York is the most likely over the medium-term, but even in that case, it could be late 2025 before bidders there know their fates.

Moody’s expressed concern that as LVS pursues “further and significant global casino resort development opportunities that will likely be funded largely with debt that could lead to temporary leveraging.”

Sands’ credit rating and outlook are supported by the “high quality, popularity, and favorable reputation” of the operator’s venues.

Sands Still Has Strong Cash Position

Sands isn’t funding shareholder rewards with newly issued debt — a positive in a high interest rate environment. The company had $5.11 billion in unrestricted cash balances at the end of last year, indicating it has the resources to support buybacks and dividends.

Additionally, restarting the dividend was meaningful because prior to the suspension, Sands had one of the best reputations for payout growth in the broader consumer discretionary cyclical. Likewise, a downgrade of its credit rating doesn’t appear likely over the near-term.

Moody’s added that LVS could see its credit rating downgraded if the operator’s liquidity is pinched or the gaming company’s earnings recovery takes longer than expected. A surprising reversal of recent fortune in Macau or a broader reduction in consumer cyclical are other factors that could trigger a downgrade.

Las Vegas Sands Lands $1.5B Credit Revolver, MBS Expansion to Start in July 2025

Posted on: April 5, 2024, Todd Shriber
www.casino.org/news/lvs-lands-1-5b-credit-revolver-mbs-expansion-to-start-in-2025/

Las Vegas Sands (NYSE: LVS) announced it landed a new $1.5 billion credit revolver and that will start construction on its $3.3 billion expansion of Marina Bay Sands in Singapore in July 2025.


The Las Vegas Sands-owned Marina Bay Sands in Singapore. The operator will start a $3.3 billion expansion there in July 2025. (Image: Pinterest)

The announcement regarding the credit facility arrived after Moody’s Investors Service earlier this week expressed concern that the gaming company’s plans to pay dividends and repurchase its own shares could be headwinds to a higher credit rating. Still, the revolver, which was extended by Bank of Nova Scotia, signal Sands has access to capital markets and creditors are eager to lend to the casino giant.

The loans made under the Revolving Credit Agreement will bear interest at either, at the Borrower’s option, (x) an adjusted rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate), plus an applicable margin ranging from 1.125% to 1.550% per annum, or (y) at an alternate base rate, plus an applicable margin ranging from 0.125% to 0.550% per annum, in each case, depending on the Borrower’s corporate family credit rating,” according to a Sands Form 8-K filing with the Securities and Exchange Commission (SEC).

LVS, which is the largest gaming company by market capitalization, is rated “Baa3” with a “stable” outlook by Moody’s.

Marina Bay Sands Expansion Details

Marina Bay Sands, which is one of two integrated resorts in Singapore, is Sands’ lone venue outside of Macau, meaning it’s vital in defraying some of the risks associated with operating in the Chinese territory.

It’s also one of the most valuable gaming brands in the world and one of the most profitable casino resorts, confirming it’s a crown jewel in the Sands portfolio and a prominent part of the overall investment thesis.

The $3.3 billion expansion project at MBS will include the addition of a fourth tower and will be performed by Safdie Architects – the company that built the original property. Sands is aiming to start construction on the expansion in July 2025 with an eye on wrapping it up by July 2029.

“The all-suite hotel tower will set new standards of hospitality, the state-of-the-art arena will help attract the highest-calibre global entertainment events and artists, and the additional convention and exhibition space will extend the success of Singapore as a leading MICE destination,” noted Sands CFO Patrick Dumont in a statement. “This significant investment in Singapore will help ensure Marina Bay Sands is ideally positioned to grow its economic, employment and visitorship contributions in the years ahead.”

Sands Investing Big In Singapore

The aforementioned expansion of Marina Bay Sands is separate from the operator’s planned $1.75 billion currently allocated for the original structure.

Data confirm Sands’ investments in the Singapore venue have paid dividends over the long-term for the operator and its investors.

“Since opening in 2010 at a development cost of $5.6 billion, Marina Bay Sands has provided significant benefits to Singapore’s tourism sector, with over 470 million people having visited the resort since its opening. The resort has also meaningfully contributed to the business tourism appeal of Singapore, having hosted more than 1,750 new-to-Singapore MICE events since the opening of Marina Bay Sands,” according to the statement.