Fitch Okada Manila Parent Universal Negative Monitoring

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Fitch Okada Manila Parent Universal Negative Monitoring by racesite pro
Fitch Corp Fitch Ratings Japan-based Universal Entertainment Inc's long-term issuer default rating (IDR) and a "B-" rating on U.S. dollar senior bonds with a "rating watch negative" rating.

The conglomerate is the parent company of Tiger Resort, Leisure and Entertainment Inc., the founder of Okada Manila Casino Resort (pictured) in Manila, the Philippine capital.

Fitch's action against the parent company "reflects the fact that the December 2024 $760 million notes, which make up the bulk of the company's debt, are nearing maturity," the rating agency said in a note on Wednesday.

Fitch added: "While the company [Universal Entertainment] is in the advanced stages of implementing its refinancing plan, there is no legally binding commitment to refinancing."

The agency also added, "Fitch will address 'credit rating negatives' if the company successfully repays its debt. Delays in execution of repayments are likely to lead to further negative action."

Fitch also said, "While our analysis suggests that all debt instruments will be fully recovered, we note that a significant portion of Universal Entertainment's corporate value is linked to assets located in the Philippines."

Okada Manila business posted net sales of approximately 20.38 billion yen ($132.2 million) in the first quarter, or 59.2% of Universal Entertainment's consolidated net sales of approximately 34.43 billion yen in the first quarter.

As a result of Universal Entertainment's exposure to the Philippine market, Fitch said, "The national upper limit for the Philippines, which limits the recovery rating to 'RR4' in line with the recovery rating criteria, will apply.

Fitch said it expects Okada Manila's business growth to be "mild" this year.

According to an April announcement from Tiger Resorts, Okada Manila's casino gross gaming revenue (GGR) fell 24.1% year-over-year in the first quarter.

Fitch said of parent Universal Entertainment: "Following strong 2023 results, we expect revenue growth to slow in 2024 before rising from 2025."

However, Fitch added, "We have downgraded the outlook for consolidated resorts (IR) revenue in the Philippines, although we believe the outlook for IR remains positive, driven by sound economic growth and continued recovery in the Philippines."

Universal Entertainment posted net sales of 34.43 billion yen in the first quarter, down 3.0% from a year earlier.

The parent company's operating profit fell 15.5% year-on-year to just over 4.02 billion yen. However, the parent owner's net profit rose 17.1% year-on-year to 3.45 billion yen.

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