{"id":78603,"date":"2024-03-20T18:51:30","date_gmt":"2024-03-20T18:51:30","guid":{"rendered":"https:\/\/neclink.com\/index.php\/2024\/03\/20\/mgm-credit-rating-still-in-junk-territory-at-moodys\/"},"modified":"2024-03-20T18:51:30","modified_gmt":"2024-03-20T18:51:30","slug":"mgm-credit-rating-still-in-junk-territory-at-moodys","status":"publish","type":"post","link":"https:\/\/neclink.com\/index.php\/2024\/03\/20\/mgm-credit-rating-still-in-junk-territory-at-moodys\/","title":{"rendered":"MGM Credit Rating Still In Junk Territory At Moody’s"},"content":{"rendered":"


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\n Posted on: March 20, 2024, 12:49h.\u00a0\n <\/p>\n

\n Last updated on: March 20, 2024, 12:57h.\n <\/p>\n

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MGM Resorts International\u2019s (NYSE: MGM) noninvestment-grade credit rating of \u201cB1\u201d was affirmed by Moody\u2019s Investors Service, which maintained a \u201cstable\u201d outlook on the gaming company\u2019s credit profile.<\/p>\n

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MGM Grand Las Vegas. The operator\u2019s credit rating was affirmed at junk status by Moody\u2019s Investors Service. (Image: Luxury Lifestyle Magazine<\/em>)<\/figcaption><\/figure>\n

The \u201cB1\u201d grade is four notches into junk territory on Moody\u2019s scale, and bonds with that rating are considered \u201chighly speculative\u201d by the research firm. MGM generated free cash flow of $1.8 billion<\/a> in 2023 and concluded the year with $2.92 billion in cash and cash equivalents on hand. The Bellagio operator has $6.34 billion in long-term debt. Moody\u2019s mentioned the issue of elevated leverage and long-term rental commitments.<\/p>\n

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The rating is constrained by the company\u2019s high leverage, including the company\u2019s sizeable leases on the balance sheet,\u201d noted the research firm. \u201cMoody\u2019s expects MGM will actively pursue large integrated resort development projects that would result in elevated leverage for some time until it completes the project.\u201d<\/p>\n<\/blockquote>\n

The ratings agency added that the \u201cstable\u201d outlook on MGM reflects strength in the operator\u2019s Las Vegas Strip and regional casino segments as well as ongoing recovery in Macau, which is supportive of MGM China. MGM controls 56% of the Macau unit.<\/p>\n

MGM Credit Rating Not an Outlier in Casino Industry<\/h2>\n

MGM\u2019s junk credit rating isn\u2019t a negative commentary specific to the company. Rather, such credit grades are common across<\/a> the gaming industry.<\/p>\n

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That\u2019s the result of casino gaming being a capital-intensive field and some operators, including those with Macau exposure, taking on debt to survive during the darkest days of the coronavirus pandemic. Despite its noninvestment-grade credit rating, MGM\u2019s free cash flow position is solid and it bought back $2.3 billion worth of its shares last year.<\/p>\n<\/div>\n

Some investors believe the stock is undervalued<\/a> and view it as a prime beneficiary of consumers favoring experiences over goods, a factor viewed as a catalyst behind the steady stream of impressive gross gaming revenue (GGR) data out of Las Vegas.<\/p>\n

\u201cMGM Resorts International\u2019s (B1 stable) credit profile reflects the company\u2019s large scale, strong presence on the Las Vegas Strip, and a solid position within several regional markets across the US,\u201d added Moody\u2019s.<\/p>\n

How MGM Credit Rating Could Rise or Fall<\/h2>\n

As is the case with many gaming companies, MGM probably isn\u2019t in a position for a near-term upgrade of its credit rating, but that\u2019s not an impossibility, either.<\/p>\n

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Ratings could be upgraded if the company generates consistent positive free cash flow, debt-to-EBITDA is sustained below 6.0x, and the company maintains a balanced financial policy with respect to shareholder returns, including share repurchases,\u201d observed Moody\u2019s.<\/p>\n<\/blockquote>\n

A move to investment-grade territory could take some time to materialize for MGM. Regarding the possibility of a downgrade, Moody\u2019s said that would be a possibility if the casino giant\u2019s liquidity is pinched, if earnings before interest, taxes, depreciation, and amortization (EBITDA) declines, or if debt\/EBITDA ratios increase.<\/p>\n<\/div>\n


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Posted on: March 20, 2024, 12:49h.\u00a0 Last updated on: March 20, 2024, 12:57h. MGM Resorts International\u2019s (NYSE: MGM) noninvestment-grade credit rating of \u201cB1\u201d was affirmed<\/p>\n","protected":false},"author":1,"featured_media":78604,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[158],"tags":[],"class_list":["post-78603","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-gambling"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/posts\/78603","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/comments?post=78603"}],"version-history":[{"count":0,"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/posts\/78603\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/media\/78604"}],"wp:attachment":[{"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/media?parent=78603"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/categories?post=78603"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/tags?post=78603"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}