Genting Singapore Plans $3.2B Yen ($29.6M) Bond Issue to Fund Japan Casino

Posted on: September 30, 2019, 10:50h. 

Last updated on: September 30, 2019, 05:00h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Genting Singapore informed the authorities at the island nation’s stock exchange Monday that the company is looking to sell up to $3.24 billion in yen-denominated corporate debt. Proceeds could be used to fund the gaming firm’s plans to build an integrated resort in Japan.

Genting Singapore could sell more than $3 billion in bonds to fund its Japan plans. (Image: Straits Times)

Like rivals MGM Resorts International and Galaxy Entertainment, Genting Singapore is focusing its Japan efforts on Osaka, the country’s third-largest city. In a shelf registration statement submitted to the Kanto Local Finance Bureau, Genting said it plans to commence the debt offering as early as Oct. 16, and that sales of the corporate bonds could run through October 2021.

At such point when the company actually issues bonds pursuant to the shelf registration, the company will file a supplement shelf registration statement with the KLFB and release further announcements setting out the terms and conditions of each such issuance,” according to Genting’s filing.

Genting Singapore, the operator of Resorts World Sentosa, one of two casinos in the city-state, is a unit of Genting Berhad. That conglomerate has industry interests ranging from energy to real estate, and operates casinos in several countries across two continents.

In A Good Position

Competition to land one of the initial three gaming licenses Japan is fierce. But along with Las Vegas Sands and MGM, among others, Genting Singapore is viewed as one of the leaders in the battle, for multiple reasons.

First, Japanese regulators are hoping integrated resorts in their country will follow the Singapore model that has seen Marina Bay Sands and Resorts World Sentosa become highly profitable without negatively affecting the local area via increased crime.

Second, companies in Japan often sport tidy balance sheets, with plenty of cash and little debt, traits that describe Genting Singapore. The gaming company carries almost quadruple the amount of cash that it does in liabilities, a characteristic some analysts believe will be appealing to Japanese authorities.

Earlier this year, Moody’s Investors Service reiterated an A3 rating on Genting Singpore with a “stable” outlook. The ratings agency considers bonds with A ratings as upper medium-grade with low credit risk. But Moody’s did say increased issuance by Genting Singapore to fund a Japan integrated resort could be credit negative.

Yield and coupon information on Genting Singpore’s bond sale is not yet available.

More Cash Needed

Estimates vary as to what costs will be to construct a gaming venue in Japan. But it appears likely Genting Singapore selling $3.24 billion in debt is a starting point, not an entire cost projection.

Earlier this month, Fitch Ratings boosted its cost forecast for Japan-based casinos to $10 billion to $15 billion, up from a prior expectation of $10 billion.

The Resorts World Sentosa operator may also need to speed up the pace of its bond sales, because it is believed MGM could break ground on an Osaka gaming property in 2021, with the goal of having the venue operational by 2025 when the city hosts the World Expo.