Macau casino firm's total debt is expected to hit $24 billion

Morgan Stanley, a global brokerage and investment firm, reportedly announced the combined debt of six licensed casino operators in Macau to reach $24 billion due to the ongoing coronavirus-related business slump.

The New York-based financial services giant also expected to hold gross earnings before interest, taxes, depreciation and amortization for a three-month period of about $603 million in its upcoming third-quarter financial filing, according to a report by Inside Asian Gaming. The source detailed that the impact of the coronavirus pandemic was still the result, particularly China's continued adherence to strict travel restrictions.

Continuous descent:

Morgan Stanley analysts Gareth Leung and Praveen Chaudhary reportedly said the overwhelming third-quarter tally would bring the total debt of the six Macau casino operators to at least $24 billion. The two companies also said the amount was 380% worse than the roughly $5 billion in arrears that the companies collectively held in the months just before the coronavirus pandemic emerged.

Problematic prognosis:

Macau has nearly 40 casinos operated by MGM China Holdings Limited, Galaxy Entertainment Group Limited, Melco Resorts and Entertainment Limited, and SJM Holdings Limited, as well as casinos operated by Sands China Limited and Wyn Macao Limited, respectively, local subsidiaries of Las Vegas Sands Corporation and Wynn Resorts Limited. The latest news from Morgan Stanley reportedly comes less than five months after the same organization reportedly expects the six casinos to finish 2022 and posted a total arrears of about $25 billion.

Immediate Inadequacy:

Morgan Stanley said it expects Macau to post third-quarter total gaming revenue of about $680 million, representing a sequential decline of about 35%, of which mass market revenue will account for about 82%. That closing tally is said to be more the same as a drop of about 92%, compared with the $8.7 billion tally in the same three months as in 2019, before the pandemic.

Lack of certainty:

Still, the Morgan Stanley duo reportedly highlighted some optimistic developments, including a recent statement by Macau Chief Executive Hoatseng that the company plans to restore package travel and local eVISA plans soon after long discussions with China's central government.

Reportedly read Leung and Chaudhary's statement...

"October's visit to 'Golden Week' was consistent with the May holiday period despite tightening coronavirus control measures, and the $25 million in total daily gaming revenue during this period is encouraging, similar to May's. While October gaming gross sales may decline, we expect eVisa and package tours to resume gradually from November, which could push our fourth-quarter earnings before interest, taxes, depreciation and amortization to 8% in 2019."

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