Moody’s: Revenue declines for Macau gaming companies

Moody’s Investors Service said declining gaming revenues in Macau are credit negative for rated gaming companies, including MCE Finance Ltd., Melco Crown (Macau) Ltd. and Studio City Finance Ltd.

Nevertheless, their operational track record and financial profile continue to support their ratings and outlooks, Moody’s said.

The Gaming Inspection and Coordination Bureau of Macau reported Jan. 2 that Macau’s gross gaming revenues dropped 30.4% in December 2014 compared to December 2013, the agency said.

The decrease was driven mainly by a material decline in VIP gaming as the Chinese government continues its efforts to combat corruption and slowing economic growth in China, Moody’s said.

Declining gaming revenue will weaken the companies’ revenue and EBITDA generation, which in turn diminishes their debt-servicing capacity, the agency said.

Nevertheless, MCE Finance’s established operations and strong financial profile will buffer it from a slowing market, the agency said.

On the other hand, a weaker operating environment will make it more challenging for Studio City Finance to ramp up its Studio City project, which is scheduled to open in mid-2015, Moody’s said, and to realize its revenue-growth and deleveraging plan in the next one to two years.

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