Reports surfaced Thursday that Las Vegas Sands (NYSE: LVS) is seeking up to $7.5 billion in loans to finance enhancements and expansion at Marina Bay Sands in Singapore. However, the gaming company denied it is looking for capital.
Marina Bay Sands in Singapore. Parent Las Vegas Sands won’t borrow significantly to fund expansion there. (Image: CNN)
In local currency terms, loans of that size would equal S$10 billion based on current exchange rates. That would represent the largest syndicated financing in the city-state’s history, but LVS will not top the record.
We are neither in the market nor looking for $10 billion in loans,” said Ron Reese, senior vice-president of global communications for Las Vegas Sands, in a statement to Bloomberg.
Unidentified sources speculated that LVS could roll over a revolving credit facility, refinance existing debt and issue new corporate bonds to finance expansion at the Singapore integrated resort. It was assumed that the loans would be priced in Singapore in dollars, but even in that case, borrowers would be subject to higher financing costs.
As is the case in the US, interest rates in Singapore have recently surged. As measured by the three-month compounded Singapore Overnight Rate Average — the benchmark used to price loans there — the city-state’s interest rates hover around 3.5% today, up from about 0.50% in early 2022.
LVS Admits MBS Expansion Costs Moving Higher
While it may not be in the market for fresh capital, Sands admits that costs associated with expanding Marina Bay Sands are surging.
“The company expects the total project cost will materially exceed the amounts referenced from April 2019 based on current market conditions due to inflation, higher material and labor costs and other factors,” LVS said in an October filing with the Securities and Exchange Commission (SEC).
Originally, MBS expansion, including new guest rooms, convention and meeting space and a 15,000-seat entertainment arena, was slated to cost S$4.5 billion (USD$3.37 billion). It appears that the figure will be significantly exceeded.
Still, Sands’ investment in MBS will likely pay off over the long term. The venue is one of just two integrated resorts in Singapore, and it’s one of the most profitable casino hotels in the world, luring visitors from across Asia.
Sands Right to Hold Off on Borrowing
While MBS is one of the crown jewels of the Asia-Pacific gaming scene, and enhancements are necessary to keep pace in an increasingly competitive environment, Sands is smart to minimize its exposure to new borrowings.
Standard & Poor’s (S&P) restored the company’s investment-grade credit rating in July, but by just one notch, new borrowings of size could be a headwind to further upgrades.
Additionally, interest rates are elevated worldwide, indicating that if Sands wants to borrow money, there are few jurisdictions where it can get favorable terms.
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