Asia Pacific gaming firms face longer leverage: Fitch

KUALA LUMPUR: Prolonged weakness in revenue recovery among Asia Pacific gaming operators is keeping leverage elevated for longer, according to Fitch Ratings.

Most Fitch-covered companies face company-specific financial and operational pressures.

Fitch said in a report that most of its rated gaming operators in the region had their ratings downgraded in recent months.

However, the downgrades were largely driven by individual companies rather than a broad-based deterioration across the sector.

Elevated earnings before interest, taxation, depreciation and amortisation (Ebitda) leverage reflects slower-than-expected earnings growth against substantial capital expenditure commitments, Fitch said.

For Genting Bhd (BBB-/Stable) and Genting Malaysia Bhd (BBB-/Stable), the pace of deleveraging will depend largely on the Ebitda ramp-up of their New York casino.

Meanwhile, SJM Holdings Ltd (B+/Stable) is expected to reduce leverage through cost savings from the restructuring of its satellite operations and lower capital expenditure after 2026.

Tabcorp Holdings Ltd (BBB-/Stable) stands out with a stronger deleveraging trajectory, Fitch said.

The Australian gaming operator reduced net leverage to below 2.0 times in FY25, ended June 2025, and FY26, after leverage temporarily rose to 3.0 times in FY24 following an upfront licence payment.

This remains consistent with Tabcorp's through-the-cycle target of keeping net leverage below 2.5 times.

Elsewhere, Universal Entertainment Corp's downgrade to CCC+ reflects deteriorating operating performance amid structural headwinds, according to Fitch.

The weaker performance has pushed earnings expectations below the level needed to cover cash interest and capital expenditure, while fixed-charge coverage remains weak and the near-term recovery path uncertain.

Despite the company-specific challenges, Fitch said regulatory protection remains the region's key credit strength.

High barriers to entry, supported by exclusive or monopoly licensing structures in several jurisdictions, continue to underpin strong sector characteristics assessments for most rated issuers.