ingapore casino operator Marina Bay Sands has returned to the loan market for a financing of up to S$8 billion (USD 5.86 B), in the biggest test so far of lenders’ appetite for the gaming sector in the Lion City, according to Reuters.
The subsidiary of US gaming giant Las Vegas Sands has mandated four banks on the financing, comprising S$4 billion (USD 2.92 B) of new debt to finance the expansion of its existing integrated resort, as well as an amendment-and-extension (A&E) of its existing financing.
Marina Bay Sands’ first new financing for seven years is also the second-largest syndicated loan from Singapore, and bankers say the borrower will be reaching out to new lenders. “Marina Bay Sands would have to woo both existing and new lenders to achieve success with this exercise,” said a Singapore-based loans banker. “The borrower has not raised such a size before and it is also unprecedented for the market in Singapore.”
The last syndicated loan for Marina Bay Sands was in June 2012, when it closed a S$5.1 billion deal with 28 lenders. In the past seven years, Marina Bay Sands has successfully amended and extended the loan twice – once in July 2014 when it extended the maturity about 2.2 years to February and August 2020, and again in March last year when it pushed the maturity to September 2023 and March 2024.
On both occasions, Marina Bay Sands revised the repayment schedule leading to a slower amortization of the original loan and also amended the covenants relating to ratios for debt service coverage, interest coverage and debt-to-Ebitda. About S$4 billion of the original principal remains outstanding. Both those A&E exercises required the support of existing lenders, whose support will again be crucial for the latest exercise.
“I don’t expect a significant number of new lenders joining the deal because the borrower has already combed the market in the past. A bulk of liquidity is likely to come from increased appetite from existing lenders,” said another Singapore-based loans banker.
Questions surrounding the extent of liquidity available for the deal are being asked because the pricing on the deal and the gaming sector pose hurdles for some lenders. “We are keen to participate. There’s no issue for us to join a casino deal, and take large take-and-hold positions in the sector,” said a Singapore-based loans banker at a large Chinese bank.
Others had doubts about the extent of liquidity available for the gaming sector. “As much as the credit is attractive, there’s a known restriction in terms of liquidity from the market towards the casino sector,” said the second Singapore-based loans banker.
Many banks, both in Asia and globally, have a policy of not lending to the gaming sector. Existing lenders may well have to increase their commitments, said another banker whose firm has exposure to Marina Bay Sands.
Rival casino operator Genting has also announced a S$4.5 billion expansion of its Resorts World complex in nearby Sentosa, but has yet to approach banks for financing.
Marina Bay Sands’ trump card is its track record, which is expected to encourage lenders to renew or take greater exposure. For the first quarter ended March 31 2019, the borrower clocked USD 423 million in Ebitda. Although this was nearly 22% lower year on year than the USD 541 million registered in the first quarter of 2018, this was up compared to the final three quarters of 2018 and Marina Bay Sands is a significant contributor to the bottom line of both parent Las Vegas Sands and the Singapore economy.
Singapore is second only to Macau in terms of Ebitda contribution for Las Vegas Sands, accounting for a 29% of the US parent’s USD 1.45 billion tally for the first quarter of the year. Since opening in 2010, Marina Bay Sands has attracted more than 330 million visitors and hosted 3,680 events at the Sands Expo and Convention Centre in 2018 alone, according to the company.