Moody’s downgrades SJM Holdings to B2 and warns of weak liquidity
The ratings agency also changed its outlook to negative and said the Macau casino operator faces significant refinancing needs.
Key points
- Moody’s lowered SJM Holdings’ corporate family rating to B2 from B1.
- The agency changed its outlook for SJM Holdings and related entities to negative from stable.
- SJM reported a HKD397-million third-quarter loss, compared with a HKD9-million profit a year earlier.
- Moody’s expects adjusted debt to EBITDA to reach 9.9 times in 2026, up from 9.0 times in 2025.
Moody’s Ratings downgraded Macau casino operator SJM Holdings Ltd’s corporate family rating to B2 from B1 on Thursday, citing high leverage and weak earnings. The agency also changed its outlook for SJM and related entities to negative from stable.
The move takes SJM’s rating further below investment grade. Moody’s also cut the ratings on bonds issued by Champion Path Holdings Ltd and SJM International Ltd to B3 from B2; SJM guarantees both issuers’ bonds, GGRAsia reported.
Moody’s senior vice president Stephanie Lau said the negative outlook reflected uncertainty about how quickly SJM could reduce its leverage, as well as refinancing needs over the next one to two years that could weaken liquidity.
SJM reported a HKD397-million (US$50.6-million) loss for the third quarter, reversing a HKD9-million profit in the prior-year period. Its net gaming revenue fell 27.2 percent to just under HKD4.76 billion.
Moody’s expects SJM’s adjusted debt to earnings before interest, taxation, depreciation and amortisation to rise to 9.9 times in 2026 from 9.0 times in 2025. It projects the measure will improve to around 9.0 times in 2027 and 8.3 times in 2028.
The agency said the pace of debt reduction remains uncertain and depends on earnings recovery and debt reduction. It expects Macau’s industry gross gaming revenue to decline slightly in 2026 and remain broadly flat in 2027.
Moody’s described SJM’s liquidity as weak. It said the company’s HKD2.3 billion in unrestricted cash at June 30, 2026, together with operating cash flow, would not cover anticipated capital spending and debt maturities over the next 12 to 18 months.
The obligations include bank loan maturities and payments, HKD1.9 billion of convertible bonds that become puttable in June next year and US$500 million of senior notes due in January 2028.
SJM’s main properties include Grand Lisboa Macau on the Macau peninsula and Grand Lisboa Palace Resort Macau in Cotai. It also operates casinos at Casino Lisboa, Casino Oceanus at Jai Alai and Casino L’Arc Macau.
Sources
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