Wynn Resorts’ Credit Rating Gets Boost from S&P
In positive news for Wynn Resorts, the company’s credit rating received an upgrade from Standard & Poor’s (S&P), moving from “B+” to “BB-.” This upgrade also extended to the corporate credit profile of Wynn Macau, signaling a positive change in the company’s financial standing.
The upgrade, while still leaving Wynn’s credit grade three notches below investment-grade territory, reflects the ongoing recovery in Macau, the company’s largest operating market. S&P noted that 2024 mass market gross gaming revenue in Macau could be 5% to 15% higher than 2019 levels, attributing this to a stable outlook on Wynn’s credit profile.
The research firm expressed its expectation for ongoing recovery in the cash flow in Macau and relatively stable U.S. cash flow in the coming year, anticipating an improvement in Wynn’s leverage as a result of these factors.
Additionally, Wynn’s shareholder rewards, including buybacks and the resumption of its quarterly dividend earlier this year, have contributed to the positive momentum for the company.
The upgrade from S&P is expected to generate new interest from global fixed income investors. With Macau gaming operators offering steadier high-yield alternatives to volatile Chinese real estate bonds, the Wynn upgrades could encourage more fixed income investors to consider debt issued by Macau gaming operators.
Looking ahead, S&P predicts a solid 2024 for Wynn, driven by an increase in EBITDA over the next few quarters due to higher Macau visitation and available hotel rooms in the market.
While Wynn plans to drive leverage lower with expenditures on its Macau integrated resorts and projects in other locations, the potential for increased spending in New York poses a wildcard. If Wynn secures a license in New York, it could potentially lead to a rise in leverage, but S&P anticipates that major capital spending for this project would not occur before 2025.
Overall, S&P’s favorable outlook on Wynn’s credit rating and future prospects suggests that the company is well-positioned to navigate upcoming spending plans and potentially continue its growth trajectory in the coming years.
