New York, February 10, 2011 -- Moody's Investors Service today upgraded Las Vegas Sands Corp's
(LVSC) Corporate Family and Probability of Default ratings to Ba3 from
B1. All of the company's long-term debt ratings were also
raised to Ba3 from B1. The company's Speculative Grade Liquidity
rating was also raised, to SGL-1 from SGL-2.
The ratings outlook is stable.
Ratings upgraded and LGD assessments revised:
Las Vegas Sands Corp.:
Corporate Family Rating to Ba3 from B1
Probability of Default Rating to Ba3 from B1
6.375% senior notes due 2015 to Ba3 (LGD 4, 50%)
from B1 (LGD 4, 50%)
Venetian Casino Resort, LLC and Las Vegas Sands, LLC (as co-issuer):
Senior secured revolver expiring 5/2012 to Ba3 (LGD 4, 50%)
from B1 (LGD 4, 50%)
Senior secured revolver expiring 5/2014 to Ba3 (LGD 4, 50%)
from B1 (LGD 4, 50%)
Senior secured term loan B due 5/2014 to Ba3 (LGD 4, 50%)
from B1 (LGD 4, 50%)
Senior secured term loan B due 11/2016 to Ba3 (LGD 4, 50%)
from B1 (LGD 4, 50%)
Senior secured delayed draw term loan 1 due 5/2014 to Ba3 (LGD 4,
50%) from B1 (LGD 4, 50%)
Senior secured delayed draw term loan 1 due 11/2016 to Ba3 (LGD 4,
50%) from B1 (LGD 4, 50%)
Senior secured delayed draw term loan 2 due 5/2013 to Ba3 (LGD 4,
50%) from B1 (LGD 4, 50%)
Senior secured delayed draw term loan 2 due 11/2015 to Ba3 (LGD 4,
50%) from B1 (LGD 4, 50%)
Venetian Macao Limited:
Senior secured term loans to Ba3 (LGD 4, 50%) from B1 (LGD
4, 50%)
Senior secured revolver to Ba3 (LGD 4, 50%) from B1 (LGD
4, 50%)
RATINGS RATIONALE
The upgrade of LVSC's Corporate Family Rating (CFR) to Ba3 from B1 reflects
Moody's view that LVSC has the ability and willingness to reduce
debt/EBITDA at or below 4 times by the end of fiscal 2011. This
is the leverage target established by Moody's that LVSC needed to
demonstrate it could achieve in order to achieve a Ba3 CFR.
"LVSC's very strong fourth quarter 2010 results combined with
Moody's expectation that these positive trends will continue,
and that the company will apply its free cash flow and significant cash
balances to further reduce absolute amounts of debt outstanding,
support the one-notch upgrade," stated Keith Foley,
Senior Vice President at Moody's. Improved net revenue and
EBITDA performance from the US and Macau, along with the continued
successful ramp up of Marina Bay Sands in Singapore, led to a 60%
increase in consolidated net revenue and EBITDA more than doubling for
the quarter.
"LVSC's consolidated Debt/EBITDA -- about 5.3
times for the latest 12-month period ended December 31 2010 --
will likely reach 4.0 times in the very near future given Moody's
expectation of further revenue and earnings improvement in the U.S.,
Macau, and at Marina Bay Sands, the company's casino
and entertainment facility located in Singapore that opened in April 2010,"
added Foley. Marina Bay Sands continues to exceed Moody's
expectations and is on track to generate over $1 billion of EBITDA
in its first full year of operations.
The upgrade of LVSC's Speculative Grade Liquidity rating to SGL-1
from SGL-2 reflects Moody's expectation of further EBITDA
improvement and absolute debt reduction during the next 12-18 months.
The SGL-1 also reflects LVSC's considerable consolidated
cash balance and revolver availability, and reflects Moody's
view that the company will remain well in compliance with all of its subsidiary
level financial covenants
The stable rating outlook is based on Moody's current expectation
that LVSC will generate between $2.6 billion and $2.8
billion of consolidated EBITDA in fiscal 2011, and will apply its
free cash flow and significant cash balances to further and permanently
reduce absolute amounts of debt outstanding. Moody's currently
estimates that LVSC will generate between $1 billion and $1.5
billion of free cash flow in fiscal 2011 and fiscal 2012 combined.
The stable rating outlook also considers that, while LVSC's
significant cash resources and improved earnings prospects raise the possibility
of a large cash dividend payment to existing shareholders, the company
will not make any material cash dividend payments in the foreseeable future.
Additionally, the stable outlook reflects Moody's view that
LVSC will deliberately pace its development activity in a manner that
maintains its current credit profile over the longer-term.
A ratings upgrade could occur if LVSC demonstrates the ability and willingness
to reduce and sustain debt/EBITDA at or below 3.5 times on a gross
basis. The company would also need to adhere to a conservative
long-term financial policy that is consistent with a higher rating.
Ratings could be lowered if we come to believe that, for any reason,
LVSC will not be able to achieve and sustain consolidated debt/EBITDA
at lower than 4.5 times.
The principal methodologies used in this rating were Global Gaming published
in December 2009, and Loss Given Default for Speculative-Grade
Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
Las Vegas Sands Corp. ("LVSC") owns and operates hotel and casino
integrated resort facilities in Las Vegas, NV, Bethlehem,
PA, Macau, China and Singapore. The company generates
consolidated annual net revenue of close to $7 billion.
REGULATORY DISCLOSURES
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, and confidential and proprietary Moody's
Investors Service information.
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of maintaining
a credit rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service provides a date that it believes is the most reliable
and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com
for further information.
Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
New York
Keith Foley
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Andris G. Kalnins
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's raises Las Vegas Sands' CFR to Ba3; stable rating outlook