Sands China’s leverage to continue improving: Lucror

Published 29 October 2024

Macau casino operator Sands China Ltd’s leverage will in likelihood “continue improving towards pre-pandemic levels” in 2024 and 2025, says Singapore-based Lucror Analytics.

Such improvement will be “supported by free-cash-flow generation and debt repayments,” wrote credit analyst Leonard Law, in a report carried on the Smartkarma platform.

The analyst said Lucror’s credit bias on Sands China was “stable”. The casino firm’s “next debt maturity” is the US$1.6 billion in senior notes due on August 8, which Mr Law said could be repaid “by drawing down” from a new term loan.

Sands China announced last week new credit facilities amounting to HKD32.45 billion (US$4.18 billion).

The fresh agreement provides for a HKD19.50 billion unsecured revolving credit facility, from which Sands China “may draw revolving loans … from time to time until September 24, 2029”. It also makes available a HKD12.95-billion unsecured term loan facility.

According to Lucror, Sands China’s liquidity “is strong, with a US$1.9-billion cash balance and US$2.5-billion undrawn revolver availability at end-September 2024”.

Mr Law stated: “In our view, the receipt of a new term loan would strengthen the company’s financial flexibility for repaying the 2025 notes, in the event tapping the market next year would be expensive.”

Aside the 2025 notes, “Sands China has another six tranches of notes totalling US$5.3 billion,” added the analyst.

Sands China’s net revenues fell 1.0 percent year-on-year in the third quarter, to just over US$1.77 billion.

Adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) from the Macau business were US$585 million, down 7.3 percent year-on-year.

“Overall, the company’s earnings in the third-quarter 2024 remained impacted by the ongoing renovations” at its properties, observed Mr Law.

“Sands China’s operating performance will still be affected by The Londoner Macao’s redevelopment until the property re-opens substantially in first-quarter 2025,” he said.

But the analyst added: “Still, the credit profile remains sound, as the company continues to generate positive free-cash-flow.”