Analyst: Wynn Bonds are Resilient, but Unlikely to See Significant Growth

Corporate bonds issued by Wynn Resorts (NASDAQ: WYNN) are catching the eye of investors for several reasons, including an improving credit profile and attractive yields. While the near-term capital appreciation of that debt may be limited, the company’s international expansion efforts, particularly the development of Wynn Al Marjan Island in the United Arab Emirates (UAE), are adding diversification to the company’s top line.

Gimme Credit analyst Kim Noland sees potential in Wynn’s new growth project, Wynn Al Marjan, estimating an annual adjusted property EBITDA of nearly $525 million. Noland forecasts that Wynn will generate EBITDAR of $2 billion this year.

Noland has an “outperform” rating on the 7.125% bonds maturing in 2031, citing potential appeal to fixed income investors as Wynn’s credit profile continues to improve. Standard & Poor’s recently upgraded Wynn’s and Wynn Macau’s credit ratings to “BB-” from “B+”, signaling potential momentum for Wynn debt.

Furthermore, investor interest in bonds issued by Macau casino concessionaires, including Wynn Macau, indicates growing confidence in the region’s gaming industry, with Macau’s cash flow starting to resemble pre-pandemic levels.

Wynn is also making strides in reducing leverage, aiming to achieve approximately $2 billion in EBITDA for the full year. This, combined with the company’s decreased outstanding liabilities at the end of September, suggests a positive trend in managing debt burdens.

Overall, Wynn Resorts’ corporate bonds present an attractive opportunity for investors looking for income, though potential near-term capital appreciation may be limited. As the company continues to expand internationally and improve its credit profile, the outlook for Wynn debt appears positive.