Sands seeks record Singapore dollar loan for casino

The casino company hired eight banks including Goldman Sachs Group and Singapore-based DBS Group Holdings, Oversea- Chinese Banking Corp. and United Overseas Bank Ltd., to arrange the us$ 3.3 billion borrowing, according to the people, who declined to be identified because the information is private.

Las Vegas Sands’s us$ 4 billion Singapore resort will capture a piece of the regulated gambling market in Asia-Pacific, expected to expand 15.7 percent a year to us$ 30.3 billion in 2011, according to PricewaterhouseCoopers LLP. The loan will also test the city- state’s debt market, where more loans are being issued in the local currency.

“Asia will contribute the most to growth of the global gaming industry, and market share here is important for gaming companies and for Las Vegas Sands,’’ said Poh Huay Imm, Singapore-based equity specialist at Deutsche Bank AG’s private wealth management group.

The other four arranging banks are Morgan Stanley, Merrill Lynch & Co, Lehman Brothers Holdings and Citigroup. About 45 percent of the us$ 14.6 billion loans companies received in Singapore this year are in the local currency, compared with 25 percent of us$ 26.1 billion of debt for the whole of 2006, according to data compiled by Bloomberg.

Las Vegas Sands’s bid to borrow follows fund raising by Wesfarmers Ltd., Australia’s biggest home-improvement chain, which raised us$ 8.5 billion in loans to finance its takeover of retailer Coles Group Ltd. Asia Pacific will replace Europe, the Middle East and Africa as the second-biggest gaming market after the US by 2011, PricewaterhouseCoopers said in a June report.

In its efforts to lure visitors and triple tourism revenue to us$ 20 billion by 2015, Singapore lifted a four-decade ban on casinos in 2005, pledging to license only two within 10 years. The second casino will be on Sentosa island, known for its golf courses and beaches, and will be built by Genting International, a unit of Asia’s biggest casino operator by market value. The resort will include Southeast Asia’s first Universal Studios theme park.

Casino revenue in Asia Pacific will double to us$ 25.5 billion in 2011 from us$ 12.1 billion in 2006, with 79 percent of the growth generated in Macau and Singapore, PricewaterhouseCoopers said. Singapore will receive us$ 2.2 billion in annual revenue from 2011 when both casinos are operating, the PricewaterhouseCoopers report said.

The loan, maturing in seven to eight years, will be the largest ever made in Singapore currency, according to data compiled by Bloomberg. It will be backed by the casino.

The interest margin on the loan will be between 2 percentage points and 2.5 percentage points more than the swap offer rate on Singapore currency, according to the people. The three-month rate is fixed at 2.62 percent today.

That compares with 2.75 percentage points more than the London interbank offered rate Las Vegas Sands is paying on us$ 3.3 billion borrowed last year for its Macau expansion, a loan that matures in 2011

Second-quarter profit at Las Vegas Sands, run by billionaire Sheldon Adelson, fell 69 percent as interest payments on funds borrowed to expand in Asia more than doubled from a year earlier to us$ 54.4 million.

Las Vegas Sands’s downtown Marina Bay resort, neighboring Singapore’s business district, will feature three hotel towers linked by a sky garden, restaurants run by celebrity chefs Charlie Trotter and Thomas Keller, and an art-and-science center.

The casino company’s debt is rated three steps below investment grade at Ba3 by Moody’s Investors Service and an equivalent BB- by Standard & Poor’s.