Published on: November 19, 2024, 03:01h.
Last updated on: November 19, 2024, 03:01h.
Reports suggest that Marina Bay Sands, operated by Las Vegas Sands (NYSE: LVS), is in talks to secure a $9 billion loan to fund its expansion plans at the renowned Singapore casino resort.
If the financing is secured close to the mentioned amount, it would mark one of the largest corporate credit expansions in Singapore in recent times. Sources revealed to Bloomberg News that DBS Group Holdings Ltd., Malayan Banking Bhd., Oversea-Chinese Banking Corp., and United Overseas Bank Ltd. are collaborating on the loan, with potential contributions from other financial institutions.
The loan is expected to have a seven-year term, although specific details such as interest rates have not been disclosed. Las Vegas Sands, the parent company of Marina Bay Sands, holds investment-grade credit ratings from major agencies, albeit with a slight notch difference.
In a recent report, Moody’s Investors Service hinted at the likelihood of Sands pursuing global casino resort developments funded primarily through debt, potentially elevating temporary leverage. The expected loan in Singapore aligns with this strategy. Moody’s also acknowledged Sands’ financial capacity to support dividends and share buyback plans.
Singapore Expansion Costs Highlighted
The speculation about Marina Bay Sands sourcing $9 billion credit comes almost a year after reports of a similar nature surfaced, indicating that LVS was eyeing $7.5 billion for Singapore IR enhancements.
While the company denied the 2023 reports, no official comments have been made regarding the current article. Rising costs due to labor shortage and material scarcity are projected to contribute to higher expansion expenses in Singapore. Originally estimated at $3.37 billion, the MBS expansion includes additional guest rooms, meeting facilities, and an entertainment arena with a 15,000-seat capacity.
Sources mentioned by Bloomberg suggest that if Marina Bay Sands secures the loan, part of the funds will go towards refinancing a $2.98 billion debt from 2019, with the rest allocated to expansion projects. This implies relatively stable costs for property additions over the past year.
If the loan materializes, it would mark Singapore’s largest syndicated financing to date, surpassing the previous record set in 2012 by Thai billionaire Charoen Sirivadhanabhakdi’s conglomerate acquisition of a local company.
Potential Returns for MBS Investments
Despite the costs associated with MBS expansion, long-term returns could prove lucrative for the operator and stakeholders. As one of two integrated resorts in Singapore and among the most profitable casino hotels globally, Marina Bay Sands attracts visitors from various Asian regions.
The emphasis on tourism is significant as regional competition intensifies. MBS expansion is projected for completion by 2031, preceding the anticipated opening of MGM Osaka and the establishment of multiple casino hotels in Thailand.
Presently, Singapore ranks as the world’s third-largest gaming market by gross gaming revenue (GGR). Analysts speculate Thailand could overtake this position in the future due to a potentially higher casino count.