Genting Perpetual Securities Get Sub-Investment Grade Ratings

Genting Overseas Holdings Limited’s proposed perpetual securities have landed sub-investment grade ratings from Fitch Ratings and Moody’s Ratings. Both agencies see the issuance providing some credit support to the group, but only a limited buffer against downgrade risks at parent Genting Berhad.

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Fitch Rates BB+

Fitch assigned a ‘BB+’ rating to the securities planned by GOHL Capital Holdings Limited, a fully owned funding unit of Genting Overseas Holdings Limited. The rating falls two notches below GOHL’s ‘BBB’ Long-Term Issuer Default Rating, reflecting greater loss severity and subordination compared to senior debt.

This comes when there is a lot going on, stretching the company’s balance sheet, as it increases its shareholding in Genting Malaysia Berhad, gets a license for its own casino in New York, and expands Resorts World Sentosa in Singapore at a cost of $5.5 billion.

Fitch believes that these securities are a way of enhancing the liquidity of the company’s finances. It plans to give the instruments 50% equity credit due to deep subordination, optional coupon deferral, and long-dated maturity.

Parent Outlook Stays Negative

While proceeds will improve the credit metrics of Genting Berhad, like its EBITDA net leverage ratio, Fitch still holds a negative outlook for the parent company due to its leverage position.

According to Fitch, leverage will peak at around 5.5 times before falling, provided there is earnings growth and clear efforts to deleverage. Execution risks from projects like New York, plus macroeconomic headwinds, could slow that path.

Moody’s Ba2 Call

Moody’s rated the US dollar-denominated subordinated perpetual securities ‘Ba2’, also two notches below GOHL’s ‘Baa3’ rating. The subordinated and hybrid features drive that gap.

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Moody’s sees the deal mainly as refinancing, funding a tender offer for $1.5 billion of 2027 notes to stretch maturities and aid liquidity, though with higher subordination risk. Like Fitch, it treats the securities as 50% equity in its analysis. GOHL’s debt service still leans on dividends from majority-owned Genting Singapore Limited, with coverage expected to hold, but highlighting standalone limits.

Group Leverage Pressures

Genting Berhad’s ratios will be pressured by high capital expenditures, particularly its Resorts World New York City project. Leverage will remain high in the short term, limiting any possibility of upgrading the rating despite its earnings improvement.

Both raters link caution to the investment slate. New York licensing, Singapore growth, and Genting Malaysia’s position have pushed debt higher as cash flows work to catch up. Refinancing perpetuals adds costlier capital but buys time on maturities. Deleveraging delivery and project returns remain the key tests.

Strategic Context

The issuance fits Genting’s push to manage debt amid ambitious builds. Liquidity gains help in the near-term, but agencies stress operational execution for lasting relief.

Fitch’s leverage forecast and Moody’s dividend reliance paint a group navigating tight finances. Ratings reflect balanced ambition against financial reality.

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Source: Asia Gaming Brief