Sands China takes out USD1b loan from parent company amid turmoil

Sands China has entered into a loan agreement with its parent company, Las Vegas Sands (LVS), totaling USD1 billion and repayable on July 11, 2028. 

In the first two years of the agreement, the local gaming operator can either pay cash interest at 5% annually or payment-in-kind interest at 6% per annum.

Only after these two years will the cash interest be payable. 

LVS stated that the loan was provided in order to support the “working capital and general corporate purposes of the group.”

In a statement, Sands China suggested that the loan agreement is indicative of the companies’ confidence in the future growth potential of Macau’s market, adding that the loan “further bolsters the company’s balance sheet position and liquidity.” 

Last month, Fitch Ratings downgraded the Issuer Default Ratings (IDRs) of Las Vegas Sands Corp., Sands China Ltd., and Marina Bay Sands Pte. Ltd. to ‘BB+’ from ‘BBB-’.

The downgrade reflects Fitch’s reduced confidence in the recovery of Macau’s gaming industry as a result of strict governmental Covid-19 policies, continued weak visitation, and Fitch’s recently reduced economic forecast for China.

Fitch has revised down its Macau industry-wide assumptions, and “LVS’ resultant leverage trajectory is no longer consistent with an investment-grade rating,” the ratings agency stated.