LAS VEGAS ADVISORAll rights reserved. 702-252-0655

Not a member yet? Sign Up!

Anthony Curtis' Las Vegas Advisor is a monthly consumer newsletter brought to you by one of the world's most trusted and respected authorities on Las Vegas and gambling.

We invite you to read a free sample issue and see why over 20,000 Vegas visitors never leave home without us.

LasVegasAdvisor.com

Member Benefits

  • LVA "Member Rewards Book"
  • Member Rewards Online
  • Exclusive Member-Only Offers
  • Exclusive Member-Only Offers
  • Member Forums

Member Login

Lost your password?
 

When you're in Las Vegas, WHERE do you... [Continued]





Question of the Day November 25, 2014


Submit a Question :: Archives :: Contributors/Experts

Sign up to receive the Question of the Day e-mail. (View our privacy policy here.)
Click here to subscribe or unsubscribe from our various email lists

Q:

Now that it appears Caesars is heading into bankruptcy, how is the financial health of the other big players, MGM Mirage, Wynn and Las Vegas Sands?

A:

When it comes to Wynn Resorts and Las Vegas Sands, "they’re almost polar opposites [to CET]from a balance-sheet perspective," says Union Gaming Group analyst Chris Jones, and "far better than Caesars," which has a heavy exposure to Atlantic City, isn’t in the "hot spots" in Las Vegas, and totally lacks a presence in China.

As indebted as Wynn and Sands are (according to Capital IQ, Wynn carries $7.3 billion in long-term debt, Sands $9.9 billion), their Macao foothold allows them "to de-leverage at an accelerated rate," says Jones. Despite an anti-corruption drive that has depressed the gambling market over there, "Macao is still driving accelerated cash flow at this point," and Jones feels the effects of that anti-corruption drive will be cyclical rather than permanent.

As for long-term debt, it may be a lot of money but – as a multiple of each company’s cash flow – it’s 1.4X for Wynn and 2.4X for Sands. By comparison, Caesars Entertainment’s debt-to-cash-flow ratio is 12.9-to-one. "That probably says it all right there," says Jones, citing more Capital IQ data.

Although MGM Resorts International is carrying $13.5 billion in long-term debt, "we have MGM at a positive," says Fitch Ratings analyst Alex Bumazhny. We’ve migrated it up to B+, which is in the mid-range for gaming companies." Bumazhny allows that he’s "a little bit concerned" about the debt, which MGM recently increased by issuing over $1 billion in notes to finance its Springfield, Massachusetts, casino project. The debt-to-cash-flow ratio is 7:1 but "there’s a lot of top-tier equity [in the company] and their maturities are pretty stretched out," Bumazhny says.

"They have a pretty full pipeline," with $5 billion in projects in Massachusetts, Maryland and Macao. "That’s why we’re not ready to pull the trigger on the double-B category" of bond rating, Bumazhny explains. "We’re pretty optimistic in the long term," he adds, although the company needs to raise another half-billion to get it through the next two years. "This should be manageable given MGM's improving financial profile and historically good access to capital markets, as well as Fitch [sic] favorable long-term outlook for the Las Vegas Strip and Macau," reveals a Fitch Ratings investor note.


Promo code Raiding the Rock Vault – 45% Discount
Save 45% on tickets to Raiding the Rock vault.
click to view
New reader poll runs tomorrow
New reader poll.
No part of this answer may be reproduced or utilized in any form or by any means,
electronic or mechanical, without the written permission of the publisher.
Daily email alerts
If you are not receiving the daily QoD email alert, it's almost certainly a problem with your Internet provider "spamming" our email. One way to attempt to solve this is to add our email address to your email contact list (Click here for instructions), so that your provider will recognize us as a legitimate sender. Please add "golhelp@lasvegasadvisor.com" to your address book and/or approved recipient list. If you do this and still encounter problems, please let us know and we will attempt to help by other means. Please accept our apologies for this inconvenience.