S&P raises credit rating for Las Vegas Sands

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Las Vegas Sands CEO Sheldon Adelson.

Standard & Poor’s today raised its corporate credit rating for casino resort and convention center operator Las Vegas Sands Corp., citing its strong financial performance and growth prospects.

Despite its current hefty debt load of $10.1 billion, debt-rater Standard & Poor’s said it expects the company led by Chairman and CEO Sheldon Adelson "will maintain a cushion in credit measures sufficient to allow for substantial development spending over the next several years."

The corporate credit rating was lifted to "BB" from "BB-" with a stable outlook.

Last week, Standard & Poor’s bumped up the rating for Wynn Resorts Ltd. – a competitor to Las Vegas Sands – to "BB+," just below investment grade.

Standard & Poor’s said Las Vegas Sands’ net revenue in Macau is expected to grow 10 percent this year, followed by a decline of 2.5 percent in 2012 and growth of 3 percent in 2013. Macau, the world’s largest gaming market, is also the largest revenue producer for Las Vegas Sands. Its properties there generated $1.2 billion in net revenue in the first quarter

At Marina Bay Sands in Singapore, Standard & Poor’s expects Las Vegas Sands to generate hefty EBITDA of about $1.1 billion this year. EBITDA is a profitability measure meaning earnings before interest, taxes, depreciation and amortization. Growth in net revenue there is expected to come in at 5 percent in both 2012 and 2013, Standard & Poor’s said.

In Las Vegas, where the company has the Venetian and Palazzo casino-resort complex and the attached Sands Expo convention center, net revenue is expected to grow 5 percent this year followed by growth of 7.5 percent in both 2012 and 2013.

Standard & Poor’s said the Las Vegas Strip is expected to see modest growth in gaming revenue as the U.S. economy continues to grow and that Las Vegas Sands is well positioned to profit from these improvements thanks to its focus on the high-end and convention markets.

"The 'BB' corporate credit rating reflects Las Vegas Sands' significant debt burden, an aggressive financial policy toward development opportunities and the high levels of competition in the company's markets," today’s report said.

Standard & Poor’s also noted a lawsuit filed by fired Sands China Ltd. executive Steven Jacobs and associated investigations "may weigh on (the) ratings upside until we have further clarity around potential judgments or they are resolved."

As for a refinancing deal of up to $4.5 billion announced today for Sands China, operator of Sands’ Macau casinos, Standard & Poor’s noted this money will refinance some $2.8 billion debt and finance expansion in Macau.

With China’s economy expected to grow at a torrid 9 percent pace in each of the next three years, Las Vegas Sands’ Macau properties are likely to benefit from further increases in visitation by mainland China and Hong Kong customers, Standard & Poor’s said.

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