S&P puts Melco, Studio City on watch

S&P said it placed its ratings for Melco Resorts & Entertainment Ltd.’s subsidiaries Melco Resorts (Macau) Ltd. (MRM) and Studio City Co. Ltd. on CreditWatch with negative implications.

“Covid-19 outbreaks in China and Macao have led to increased travel restrictions, limited visitation to Macao, and weakening gross gaming revenue (GGR) relative to already depressed 2021 levels. As a result, we lowered our GGR forecast for Macao in 2022 and 2023. Our base case now assumes Macao's GGR will be only 20%-30% of 2019 levels in 2022, and more importantly, mass GGR to be 50% to 70% of 2019 levels in 2023,” S&P said in a press release.

The agency said it consider how Melco Resorts & Entertainment can lower its S&P Global Ratings adjusted net leverage under 4.5x amid Macao and China's policies pertaining to the pandemic.

S&P said it aims to resolve the CreditWatch in the coming months.

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