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Moody's rates Venetian Macao loan add-ons B1
Moody's Investors Service said it assigned a B1 rating to Venetian Macao Ltd.'s incremental $600 million funded term loan and incremental $200 million revolving credit facility and affirmed the company's existing secured bank loans at B1 (LGD3, 34%), corporate family rating at B1 and probability-of-default rating at B2.
The outlook is stable.
Venetian Macao's funded senior secured term loan now totals $1.8 billion and matures in 2011. The company's revolver, which also matures in 2011, now totals $700 million. Proceeds from the expanded term loan, along with Venetian Macao's operating cash flow and $700 million of delayed-draw term capacity, will be used to fund significant development activity on the Cotai Strip, including the completion of the Venetian Macao Resort.
The agency said Venetian Macao's ratings take into account that, although its debt capacity has increased and bank loan covenants with respect to use of proceeds, capital spending amounts and permitted investment baskets were relaxed earlier this year, the company's operating results and returns have significantly exceeded expectations when Venetian Macao was initially rated. The ratings also acknowledge Venetian Macao's restricted group financing structure.
The stable outlook acknowledges the significant amount of additional debt funding that will be required to fund the design, development, construction and pre-opening costs for the Venetian Macao Resort and other projects on the Cotai Strip, Fitch said. In total, development spending is expected to be about $4 billion through the end of 2008, and peak leverage during construction is expected to reach almost 7x.
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