Las Vegas Sands issues an IG bond pricing USD 3.5 billion of senior notes

Las Vegas Sands Corp. announced Monday that it will operate in the US market for the first time as a fully-fledged investment-grade issuer as it looked to repay a USD 3.5 billion term loan B. It has priced $1.75 billion of 3.200% senior notes due 2024, $1 billion of 3.500% senior notes due 2026 and $750 million of 3.900% senior notes due 2029 in a public underwritten offering. The offering is expected to close on July 31, 2019, subject to customary closing conditions. The notes will not be guaranteed by any of the company's subsidiaries.

The company intends to use the net proceeds of approximately $3.47 billion from the offering of the notes, together with cash on hand, to repay outstanding term loans under its existing U.S. credit facility and to pay transaction-related fees and expenses. Any excess net proceeds will be used for general corporate purposes.

The bond deal will add significant US gaming exposure to the investment-grade index for the first time since Caesar’s fell to the wayside, according to CreditSights. The borrower, which has operations in the US, Macau and Singapore, is approaching investors with a three-parter comprising maturities of five, seven and 10-years.

Initial price thoughts have been set at Treasuries plus 160bp area, 185bp area and 210bp area, respectively. The deal carries Baa3/BBB-/BBB- ratings, making it the only gaming credit to have investment-grade ratings from all three major agencies, said the research firm.

While the sector has been through a rough patch with almost every name having a brush with bankruptcy, LVSC is in much better shape now. With a US$4bn cash horde and US$3.5bn in annual free cashflow the company, run by casino mogul Sheldon Adelson, stands out among its peers, said CreditSights analysts. Even so, LVSC faces risks through its ambitious USD 8.1 billion capex plans and renewals of concessions that make up 60% of its Ebitda, it added.

The company must renew licenses in Macau in 2022, at a time when the US and China have been disputing a trade war. Robert Glen Goldstein, the COO of Las Vegas Sands Corp, said in a recent earnings calls that “there is no better market in the world than Macao with regard to the continued deployment of our capital.”

Moody’s expects LVSC to maintain consolidated debt/Ebitda at or below three times, citing strong cashflows and favourable gaming demand across regions. Proceeds from the bond are being issued at the holding company level and will go to pay down an existing USD 3.5 billion senior secured term loan B at its subsidiary Las Vegas Sands LLC.