S&P: Studio City notes BB-

S&P said it affirmed the BB- long-term corporate credit rating on Studio City Co. Ltd., along with the cnBB long-term Greater China regional scale rating.

The agency also said it affirmed the B long-term issue rating and cnB+ long-term Greater China regional scale rating on the senior unsecured notes that Studio City Finance Ltd. issued.

Studio City Finance's existing and future restricted subsidiaries, including Studio City, guarantee the notes.

The agency also said it also assigned a BB- long-term issue rating and cnBB long-term Greater China regional scale rating to Studio City's proposed issue of two dollar-denominated senior secured notes.

The outlook is negative.

S&P also said it affirmed the rating on Studio City because the ramp-up of the company's new casino and the expectation of extraordinary parental support if needed will mitigate the impact of a possible material deterioration in liquidity position over the next six months.

Studio City is likely to breach the financial covenants on its HK$10.86 billion senior credit facilities on the first test date for compliance, which starts March 31, 2017, the agency said.

This may trigger a technical default and accelerated payment of the senior loan, if the company fails to obtain a waiver from its bank creditors or refinance the outstanding loan on time, S&P said.

Studio City's proposed issuance of two senior secured notes to refinance its existing senior credit facilities, if completed on time, would resolve the near-term liquidity risk and extend the company's maturity profile to beyond 2018, the agency said.

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