Posted on: November 27, 2024, 12:22h.
Last updated on: November 27, 2024, 12:22h.
Las Vegas Sands (NYSE: LVS) is said to be seeking a three-tranche loan for nearly $9 billion for expansion of its Marina Bay Sands casino resort in Singapore.
News of the $8.9 borrowing, which would be the largest corporate loan in Singapore’s history, surfaced earlier this month with more detail emerging this week. Unidentified sources close to the matter told Bloomberg News the loan could be broken up into three parts consisting of a $5.6 billion delayed-draw term financing, $2.8 billion worth of term loans, and a $560 million credit facility.
DBS Group Holdings Ltd., Malayan Banking Bhd., Oversea-Chinese Banking Corp., and United Overseas Bank Ltd. are the lenders marketing the loan and that consortium is rumored to be seeking assistance from other banks.
The sources told Bloomberg the Marina Bay Sands is credit is being marketed to a broad swath of institutional investors and is expected to carry an annual interest rate of 120 basis points.
Singapore Casino Expansion Costs Swell
Speculation regarding Sands seeking $9 billion in credit arrived nearly a year after similar speculation surfaced that LVS was looking for $7.5 billion to enhance and add to the Singapore integrated resort.
Assuming the operator’s borrowings for Marina Bay Sands come in around the $9 billion area, it would be well above original estimate of $3.4 billion mentioned by LVS in 2019. That could be a symptom of tight labor pools and elevated materials costs.
Las Vegas Sands, which is the parent of the holding company that controls Marina Bay Sands, has investment-grade credit marks at the three major ratings agencies, implying the company should have easy access to capital markets and the capability to borrow at relatively friendly interest rates. That investment-grade rating is also relevant in terms of marketing the Singapore loan to risk-averse investors that want income, but also want to eschew junk-rated debt.
In gaming industry terms, Sands has a strong balance sheet with $4.7 billion in cash on hand and $4.4. billion undrawn on a revolving credit facility. The company is expected to spend $1.5 billion this year with the bulk of that directed to Londoner Macau and Marina Bay Sands in Singapore. Expenditures for 2025 are expected to decline to $1.15 billion.
Singapore Casino Expansion Necessary
The roughly $9 billion Sands is looking to borrow for the Singapore casino hotel will be used to finance construction of a fourth tower at the iconic property and the investment could pay long-term dividends.
Not only is Marina Bay Sands one of the most valuable gaming brands in the world, the gaming venue is one of the most profitable of its kind and it’s currently the only property outside of Macau in the LVS portfolio.
Fortifying Marina Bay Sands is also important from a competitive standpoint because by the end of this decade, regional competition is likely to intensify as integrated resorts in Japan and Thailand open their doors.