S&P lowers Studio City view to negative

S&P said it revised the outlook on Studio City Co. Ltd. to negative from stable.

The agency also said it affirmed the company’s BB- long-term corporate credit rating.

S&P also said it affirmed the company’s B long-term issue rating on the senior unsecured notes.

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

In line with the outlook revision, S&P also said it lowered the long-term Greater China regional scale rating on Studio City to cnBB from cnBB+ and on the notes to cnB+ from cnBB-.

The negative outlook follows the slow ramp-up in the operations of Studio City's new casino and the company's weakened mid-term growth prospects, S&P explained.

If these factors persist, the company could be exposed to substantial refinancing risks over the next 12 months, which will reduce the likelihood of extraordinary group support from its parent, Melco Crown Entertainment Ltd., the agency said.

The still-tough operating conditions in Macau's gaming industry and risks of cannibalization between new and existing casinos will keep the ramp-up of the new casino's operations slow and delay the reduction of debt leverage, S&P added.

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