Moody’s Downgrades SJM Holdings to B2 on Very High Leverage and Macau GGR Pressures
Moody’s downgraded SJM Holdings to B2 from B1 due to very high leverage tied to weak earnings and moderating Macau GGR. The negative outlook highlights refinancing risks over the next one to two years that could weaken liquidity. Industry GGR is projected to decline slightly in 2026 before staying broadly flat in 2027.
SCCG Take — Persistent leverage near 9.9 times EBITDA in 2026 leaves SJM Holdings vulnerable if GGR stays subdued. Macau operators must accelerate cost cuts and debt reduction to protect liquidity through 2028 maturities.
Moody’s Ratings downgraded SJM Holdings Ltd’s corporate family rating to B2 from B1, placing the Macau casino operator further below investment grade. The agency also cut the ratings on bonds issued by Champion Path Holdings Ltd and SJM International Ltd, both guaranteed by SJM Holdings, to B3 from B2. The outlook shifted to negative from stable.
The action reflects very high leverage driven by weak earnings in a moderating gross gaming revenue environment. Stephanie Lau, Moody’s Ratings senior vice president, cited uncertainty on the pace of deleveraging and significant refinancing needs over the next one to two years that could weaken liquidity.
Leverage Projections Under Subdued GGR Outlook
Moody’s expects adjusted debt to EBITDA at 9.9 times in 2026 from 9.0 times in 2025, before moving to 9.0 times in 2027 and 8.3 times in 2028. Macau industry GGR is forecast to register a slight decline in 2026 and remain broadly flat in 2027. Leverage will stay elevated given the weaker GGR environment, gradual operating cost reductions and SJM Holdings’ moderate market share.
The operator swung to a HKD397-million (US$50.6-million) third-quarter loss from a HKD9-million profit a year earlier. Net gaming revenue dropped 27.2 percent to just under HKD4.76 billion. Visibility is limited on whether leverage will reach or fall below the 8.5 times threshold required for the B2 rating.
Liquidity Strain and Refinancing Needs
Moody’s labelled SJM Holdings’ liquidity position weak. The firm’s unrestricted cash balance stood at HKD2.3 billion at June 30, 2026. Combined with operating cash flow, this will prove insufficient to cover capital spending and debt maturities over the next 12 to 18 months.
Upcoming obligations include term loans, bank loan amortisation 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. According to reporting by GGRAsia, the pace of deleveraging remains uncertain and will depend on the extent of earnings recovery and debt reduction.
Gaming, betting and prediction markets — the desk’s read, every weekday.
Subscribe →