Fitch downgrades GEN Bhd as substantial capex in Singapore, New York slows deleveraging

Fitch Ratings on Monday downgraded the long-term issuer default rating of gaming and plantations conglomerate Genting Bhd to ‘BBB-’, from ‘BBB’, with a ‘stable’ outlook, as the rating agency expects its pace of deleveraging to be “slow” due to “substantial” capital commitments to expand key gaming properties, including those in Singapore and New York. “This downgrade reflects our expectation that Genting Bhd’s proportionately consolidated EBITDA [earnings before interest, taxation, depreciation, and amortisation] net leverage ratio will stay above 4.0 times for the next three years,” Fitch suggested. It added: “This is compounded by a slower-than-expected EBITDA ramp-up at Genting New York LLC because of high start-up operating costs, as well as more gradual recovery across Genting Bhd’s other gaming operations.” Fitch expects Genting Bhd to record negative free cash flow averaging MYR4 billion (US$988.7 million) per year from 2026 to 2028 due to high capital expenditure. Genting Bhd is the parent of Genting Singapore Ltd, which runs one of the duopoly of casino resorts in Singapore, Resorts World Sentosa. The ongoing Resorts World Sentosa expansion has a remaining committed capital expenditure of over SGD4 billion (US$3.16 billion) through 2030, which would result in “negative free cash flow”during the expansion phase, Fitch remarked. The institution noted: “We forecast flat gaming revenue for Genting Singapore in 2026 as it continues to renovate its hotels and casino areas to enhance its customer experience.” Genting New York LLC, which promotes Resorts World New York City (RWNYC), could see its capital spending remain “high” – at an average of around US$800 million per year – “over the medium term”. The RWNYC property launched as a full-service casino on April 28, following the award of a full downstate gaming licence by the New York State Gaming Commission. Genting New York’s proposal entailed a US$5.5-billion expansion of the existing venue through to 2030. “Of the remaining US$4.4 billion pledged for the [RWNYC] expansion, about US$700 million has been spent to date, including US$500 million for the licence fee. The remaining US$3.7 billion will be deployed over the next five years, and will put pressure on Genting New York’s credit metrics during the construction period,” Fitch stated in Monday’s memo. “We expect Genting New York’s EBITDA to increase to US$208 million in 2026 as the casino ramps up. This is slightly lower than our previous expectation of US$215 million due to high start-up operating costs,” the institution added. The rating agency said it forecast Genting New York’s EBITDA would reach around US$450 million by 2028, as more gaming inventory is introduced, with its EBITDA margin improving as costs normalise. “The [RWNYC] casino has first-mover advantage in New York and benefits from a dense population and high income flows,” Fitch observed. The issuer default rating of Genting Overseas Holdings Ltd – a funding vehicle for the Genting group – was also downgraded to ‘BBB-’, from ‘BBB’, a move that Fitch said as equalised with its rating with that of Genting Bhd.