Moody's Confirms Sands Ratings

Yesterday, Las Vegas Sands Corporation’s (LVS - Analyst Report) ratings were confirmed by Moody's Investors Service (MCO - Analyst Report). Las Vegas Sands’ "B3" junk corporate family rating, probability of default rating and long-term debt ratings were confirmed by the rating agency. Its speculative-grade liquidity rating was raised to "SGL-2" from "SGL-3." However, the rating agency has assigned a negative outlook on the company.

The confirmation of ratings and the upgrade primarily reflect the company’s improved position in terms of liquidity and debt position. The company has recently made a $2.5 billion public offering through its subsidiary Sands China Ltd.

Las Vegas Sands has also converted $600 million of exchangeable bonds into equity. Other positive factors include the repayment of $500 million of debt for its Macau subsidiary and amendments to the credit facility for its unit in the Chinese gambling enclave.

The rating agency also assigned an improved outlook for the company's Macau subsidiary. Macau, the only Chinese city where gambling is legal, has generated HK$105.6 billion ($13.5 billion) of gross gaming revenue in 2008. This more than doubled the revenue generated by the Las Vegas strip.

Friendly gaming policies from the local government, limited supply of new gaming tables in the near term and slackening of visa restrictions by Beijing to allow mainland tourists to visit Macau once a month rather than twice a year should add to the company’s revenue stream, according to the rating agency.

However, on the negative side, Moody’s expects the gaming market in the Las Vegas strip to worsen. Also, the ramp-up of the company's property in Bethlehem, PA is expected to be slower than predicted.

Moreover, the rating agency expects the expansion in Macau to be more debt-financed. Additionally, there exists development and ramp-up risks for the $5.5 billion casino project in Singapore, scheduled to open in the first quarter of 2010.

Read the full analyst report on LVS

Read the full analyst report on MCO