Moody’s raises questions over Genting’s debt-funded expansion

The ratings agency warns that the Malaysian conglomerate’s plan to buy out Genting Malaysia could weaken its financial profile.

Malaysia.- Moody’s Ratings has placed Genting Berhad and two of its subsidiaries, Genting Overseas Holdings and Genting Singapore, on review for a possible downgrade, citing concerns over the group’s debt-funded bid to take full control of Genting Malaysia.

The RM6.3bn (US$1.4bn) offer to privatise Genting Malaysia by acquiring the remaining 50.6 per cent will be largely financed through new borrowings, which could push Genting’s leverage ratio to around 5.1 times EBITDA in 2025, well above its 4.0 downgrade threshold, Moody’s said.

Analyst Anthony Prayugo said the transaction would “delay any meaningful debt reduction”, warning that the company’s credit quality could weaken materially if it fails to outline a credible plan to reduce leverage.

Genting’s shares have gained more than 20 per cent since announcing the takeover amid optimism surrounding its potential bid for a downstate New York casino licence. Analysts at CIMB Securities recently described the licence as “nearly in the bag” after MGM Empire City withdrew. While several investment banks maintain “Buy” recommendations, CreditSights and Moody’s have flagged higher refinancing risks, particularly around Genting’s US$1.5bn bond due in 2027. 

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See also: Genting Berhad’s US$1.6bn bid to privatise Genting Malaysia sparks optimism and concerns

The ratings agency warns that the Malaysian conglomerate’s plan to buy out Genting Malaysia could weaken its financial profile. Malaysia.- Moody’s Ratings has placed Genting Berhad and two of its…