S&P rates Universal Entertainment notes B

S&P said it assigned Universal Entertainment’s planned dollar-denominated bonds a B rating and also downgraded the company’s ratings to B from B+.

Proceeds will be used to refinance the company’s $600 million bond due in December 2021. The note is guaranteed by casino operating subsidiary Tiger Resort Leisure and Entertainment, Inc.

“The downgrade reflects our view that prospects for recovery in UE’s credit metrics are much weaker than previously assumed. We believe travel restrictions and social distancing measures in the Philippines will continue to hamper UE’s casino operations, putting considerable pressure on earnings,” S&P said in a press release.

S&P said it does expect UE’s domestic gaming machine business to earn ¥25 billion-¥30 billion in operating profit in fiscal 2020. In 2019, the business generated ¥10.8 billion following regulation changes in the sector.

The outlook is stable.

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