Genting downgraded again amid rising leverage

FITCH Ratings’ recent downgrades of Genting Bhd, Genting Overseas Holdings Ltd, Resorts World Las Vegas LLC and, subsequently, Genting Malaysia Bhd have put the group’s rising leverage and aggressive expansion plans under the spotlight once more.

Fitch expects Genting’s leverage levels to remain stretched as the group pours billions into Resorts World New York City and Resorts World Sentosa 2.0.

Genting is in a capital-intensive phase at a time when some of its existing businesses have yet to fully recover.

The group is committing heavily to New York, where about US$3.7bil is expected to be spent over the next five years, while Genting Singapore still has about S$4bil of committed spending through 2030.

Fitch expects the group to post negative free cash flow during this expansion phase, slowing the pace at which it can bring debt down.

At the same time, the returns from Genting’s New York (GenNY) expansion are taking longer to materialise.

Fitch cut its 2026 earnings before interest, taxes, depreciation and amortisation (Ebitda) forecast for GenNY to US$208mil from US$215mil, citing higher start-up operating costs tied to the phased rollout.

Although Ebitda from GenNY is expected to reach about US$450mil by 2028, as more tables and slot machines are added and margins normalise with scale, Genting must carry the financial burden of the expansion before those earnings are fully realised.

Fitch noted that the pace of the conglomerate’s deleveraging will depend largely on GenNY’s ramp-up.

The pressure is also compounded by a more gradual recovery across Genting’s other gaming operations, with softer VIP volumes, high travel costs and macroeconomic uncertainty expected to weigh on its Malaysian and Singapore businesses.

While capital expenditure spending across the group’s operations does not necessarily mean these are bad investments, the key question is whether they can generate sufficient cash, quickly enough, to justify the spending and help reduce leverage.