Fitch Attributes Recent APAC Gaming Downgrades to Slow EBITDA Growth and Sustained Capex Loads
Fitch reports slower EBITDA growth and heavy capex have kept leverage elevated for APAC operators including Genting, SJM Holdings and Universal Entertainment, triggering multiple downgrades on company-specific factors. Leverage is projected to ease by 2028 for some but remains above key thresholds near-term. High barriers from exclusive licenses provide the main credit offset.
SCCG Take — Execution on New York and Cotai assets will dictate whether leverage metrics improve on schedule; slippage risks further rating pressure despite regulatory moats.
Fitch Ratings identifies slower-than-expected earnings growth and substantial capital expenditure as the main factors sustaining elevated leverage across several Asia-Pacific gaming operators. Most entities in its latest peer review have faced downgrades in recent months. These moves stem from company-specific leverage and operating challenges rather than any broad sector deterioration.
The review encompasses Genting Bhd and unit Genting Malaysia Bhd, both now rated BBB- with stable outlooks; SJM Holdings Ltd at B+ stable; Universal Entertainment Corp at CCC+; and Tabcorp Holdings Ltd. EBITDA has grown more slowly than anticipated relative to operators’ capital spending commitments, extending the period of high leverage, according to reporting by GGRAsia.
Company-Specific Leverage and Operating Challenges
For Genting Bhd and Genting Malaysia Bhd, deleveraging depends primarily on the earnings ramp at the group’s New York casino. Fitch downgraded both from BBB in September after determining that proportionately consolidated EBITDA net leverage would remain above 4.0 times for the next three years. Capital expenditure at Genting New York LLC is expected to average about US$800 million annually over the medium term. The agency forecasts the subsidiary’s EBITDA at US$450 million in 2028 versus US$208 million this year.
SJM Holdings was downgraded from BB- in May. Its EBITDA leverage is projected to decline from around 9.0 times in the first half of 2026 to around 6.0 times in 2028, supported by cost savings from the second-half 2025 restructuring of satellite casino operations and lower capital expenditure after 2026. Performance at its Grand Lisboa Palace on Cotai has been lacklustre.
Universal Entertainment, parent of Philippine resort Okada Manila, carries the most acute pressures. Its downgrade to CCC+ from B- in July reflects deteriorating results and structural issues. Weaker gaming demand, competition, higher promotional spending and migration to online channels constrain recovery. VIP table games fell to 20 percent of the resort’s gross gaming revenue in 2025 from 35 percent in 2023. Annual EBITDA is forecast at about JPY19 billion (US$120.4 million) through 2028, below the JPY20 billion required to cover cash interest and capital expenditure.
Regulatory Barriers as Core Credit Support
Fitch states that regulatory protection remains the region’s core credit strength across the peer group. High barriers to entry, underpinned by exclusive or monopoly licensing structures in multiple jurisdictions, support strong sector characteristics for most rated issuers. This distinguishes the region’s competitive dynamics from those of more fragmented gaming markets elsewhere.
The gap between forecast EBITDA and required coverage at certain operators leaves limited margin for further slippage in earnings trajectories or construction timelines.
Reporting: GGRAsia
Generated by SCCG’s automated editorial system from published source reporting. SCCG Management holds editorial responsibility.
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