S&P: Melco Resorts notes BB-

S&P said it assigned a BB- long-term issue rating and cnBB Greater China regional scale rating to a proposed issue of dollar-denominated senior unsecured notes issued by Melco Resorts Finance Ltd.

Melco Resorts Finance is a wholly owned financing subsidiary of Melco Resorts & Entertainment Ltd., the agency said.

Melco Crown (Macau) Ltd. is the most important cash-generating asset of its intermediate parent and ultimate parent, Melco International Development Ltd., S&P said.

Melco Crown is expected to continue driving the group's credit profile, the agency said.

S&P said it expects Melco Resorts Finance to use the proceeds of the proposed notes, together with cash on hand, to repurchase in full its existing $1 billion senior unsecured notes due 2021.

The agency said it rates the proposed notes one notch lower than the corporate credit ratings on Melco Crown, reflecting its subordination risks.

Melco Crown has senior secured debt and priority liabilities directly under its operating subsidiaries, which rank senior to the proposed senior unsecured notes, S&P explained.

The negative outlook reflects a view that the Melco International group has a limited financial buffer at the current rating level, given its high debt leverage, the agency said.

S&P said it believes the group's debt service capability could deteriorate over the next 12 months if capital investments or dividends increase more than expected.

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