Fitch revises LVS outlook to positive on strong Macau rebound

Fitch Ratings has affirmed Las Vegas Sands ‘BB+’ rating and revised its outlook to positive from negative as it reflects “the strong rebound in the Macau market and outperformance in Singapore compared with pre-pandemic levels.”

In a statement, Fitch said that the pace of recent growth in Macau bodes well for LVS, “which is uniquely positioned for the return of the mass market, particularly the premium mass market, given its quantity and quality of gaming positions, hotel rooms, restaurants and entertainment facilities.”

Assuming trends continue, Fitch believes LVS is positioned to move back to investment grade ratings.

The rating also reflects the potential for weakness in the China economy and regulatory changes as well as an increasingly competitive environment in Macau from new openings and expanded facilities, according to the report.

The rating agency also highlighted the city’s visitation and gaming trends that have improved during the first half of 2023, noting that the second quarter is typically the seasonal slowest of the year, so the strong visitation levels during the recent quarter should be a positive indicator for the remainder of the year.

Meanwhile, Fitch expects consolidated free cash flow to turn positive in 2023 and continue to remain strong, as both the Singapore and Macau markets revert to pre-pandemic levels.

“This could be offset by future unannounced projects (including New York) and resumption of dividends out of Sands China,” the ratings agency added. LV