[RAM] RAM Ratings: Outlook on Genting Group revised to negative; long-term corporate credit ratings maintained at AA1

RAM Ratings has revised the outlook on corporate credit ratings of Genting Berhad (Genting or the Group) and Genting Malaysia Berhad (GenM) to negative from stable. The AA₁ long-term ratings and associated issue ratings of both entities (refer to Table 1) have been maintained. This rating action reflects the expected deterioration in key financial metrics following the recent completion of the take-over offer for the remaining shares of GenM, resulting in a higher than anticipated stake of 73% – reducing debt headroom, and the expected capital expenditure (capex) for the full casino development at Resorts World New York City (RWNYC), which is currently in the final licensing review process.

These two developments, on top of the Group’s existing capex and investment commitments, such as those for Resorts World Sentosa (RWS) and at the Group’s oil and gas segment, are projected to increase Genting’s net debt substantially. Our estimates indicate that capex and investment related to the recent developments could exceed RM8 bil through FY Dec 2027. Consequently, leverage metrics – specifically net gearing and net debt to operating profit before depreciation, interest and tax (OPBDIT) – could rise to about 0.6 times and 3.4 times, respectively for fiscal 2026. Forecasted funds from operations (FFO) net debt cover could also fall below 0.3 times in the coming year.

Nonetheless, the potential commencement of full casino operations at RWNYC by mid-2026 could materially enhance earnings and cashflow. If it does progress as expected, net debt to OPBDIT ratio may improve to about 3.0 times for fiscal 2027, with FFO net debt cover returning to 0.30 times, albeit with little rating headroom. Net gearing is likely to stay elevated at about 0.6 times as earnings accretion is expected over a longer period.

A revision to a stable outlook would require sustained improvement in key financial metrics and overall business volumes of the Group, supported by the ramp-up at Resorts World Las Vegas, RWNYC, and the steady completion of RWS’s rejuvenation. This would necessitate a measured pace of capex relative to earnings and cashflow generation, translating to improved financial metrics that are more aligned with the current ratings for fiscal 2027 and beyond. Conversely, a downgrade may occur if the financial metrics remain weak, driven by underperformance at major operations or persistently elevated net debt levels.

RAM’s negative outlook takes into consideration current uncertainties, including the gaming tax rates proposed by RWNYC, commercial casino business volumes in downstate New York and a possible USD300 mil debt reduction if Empire Resorts Inc completes the sale of non-gaming assets. Notably, the Group has first mover advantages in downstate New York up to 2030, retains some flexibility in capex timing for various developments in-line with operational performance and cashflow, and may conserve cash through lower dividend distributions.



 

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