Las Vegas Sands may please investors with debt restructuring
Las Vegas Sands Corp (NYSE: LVS ) could get a thumbs-up from investors by refinancing some of its upcoming debt maturities, sell-side analysts say.
CBRE Capital Advisors analysts Colin Mansfield and Connor Parks noted in a recent note to clients that the gaming company's $1.75 billion due in August could be refinanced. Sands may also refinance $500 million of corporate bonds maturing in June 2025, they added. Sands China, the parent company's largest operating unit, has $1.8 billion worth of commercial paper maturing in August 2025, and refinancing that debt could coincide with some deleveraging by the issuer.
We expect the company's offering to be well received by the capital markets given its high-quality assets, enviable geographical diversification and investment grade rating. ” Mansfield and Parks noted.
As of the end of the first quarter, Las Vegas Sands had $13.94 billion in outstanding debt and $4.96 billion in unrestricted cash.
Refinancing could benefit Sands
LVS has a low investment-grade rating compared with junk credit ratings for many of its peers, suggesting credit investors have some appreciation for the operator's enviable portfolio of gaming assets in the Asia-Pacific region.
This was confirmed earlier this month when Sands easily raised a new $1.5 billion revolving credit facility. While refinancing is not the same as reducing debt, LVS's creditors may agree to the operator delaying maturity dates, as 13% of its debt is scheduled to mature this year and another 49% is due in 2025 and 2026.
It's also important for Sands to eliminate the threat of bond maturities at a time when investors are showing renewed interest in commercial paper issued by Macau concessionaires, of which Sands China is the largest. LVS and its Chinese affiliate repay this trust.
"Both Las Vegas Sands and Sands China bonds have outperformed the broader 'BBB' index so far this year," Mansfield and Parks added.
Sands Leverage Ratio Improvement
Sands' total leverage improved to 3.3x from 3.6x sequentially, helped by solid first-quarter earnings before interest, tax, depreciation and amortization (EBITDA) growth at its Macau operations and continued strength at Singapore's Marina Bay Sands.
Over the long term, LVS management aims to increase debt two to three times while maintaining an investment-grade credit rating. The Macau operator and its peers have taken on huge debt during the coronavirus pandemic, suggesting reducing Sands China's debt may be a top priority for the operator.
Analysts at CBRE note that Sands is expected to spend $4.3 billion by the end of 2027, excluding the $3.3 billion planned for Marina Bay Sands' fourth tower. However, the $4.3 billion was funded primarily from operating cash flow.
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Source: www.casino.org
