Fitch: Slow recovery and strong capex affect credit of gaming operators in Asia

Fitch Ratings warns that slower-than-expected earnings growth and substantial capital expenditure keep leverage elevated among several gaming operators in the Asia-Pacific region. The agency attributes recent rating downgrades to company-specific pressures rather than a general sector deterioration; the peer review encompasses Genting Bhd, Genting Malaysia Bhd, SJM Holdings Ltd, Universal Entertainment Corp, and Tabcorp Holdings Ltd.

Credit outlook for gaming operators in Asia: immediate causes

Fitch notes that EBITDA (earnings before interest, taxes, depreciation, and amortization) has grown more slowly than anticipated while capital expenditure remains high. This combination extends a period of elevated leverage for various firms analyzed. According to the report "APAC Gaming – Peer Credit Analysis", most operators included in the review have experienced rating downgrades in recent months; these actions stem from individual operational and balance sheet challenges, not a widespread market collapse.

How Genting's capex pressures its leverage

Genting Bhd and its subsidiary Genting Malaysia Bhd maintain a 'BBB-' rating with a 'stable' outlook following a downgrade from 'BBB' in September. Fitch expects that net consolidated EBITDA leverage will remain above 4.0x over the next three years. The key factor in reducing debt largely depends on profit growth from the group’s casino business in New York.

The agency identifies the full-scale casino development by Genting New York LLC as the primary driver of EBITDA growth for the Malaysian conglomerate. However, it anticipates that the capital expenditure for this subsidiary will average around US$800 million annually over the medium term, which will strain credit metrics during the construction phase. Fitch projects that Genting New York's EBITDA will reach nearly US$450 million in 2028, compared to a forecast of US$208 million for 2026.

SJM Holdings and its projected deleveraging path

SJM Holdings Ltd is rated 'B+' with a 'stable' outlook. Fitch estimates that the EBITDA leverage of the operator will decline from approximately 9.0x in the first half of 2026 to around 6.0x in 2028. The improvement should be supported by gradual cost savings materializing after the restructuring of its satellite operations in the second half of 2025, and a lower level of capex post-2026.

The agency downgraded SJM's rating from 'BB-' in May, citing deleveraging and a slower-than-expected recovery in earnings, including soft results at its Cotai resort, Grand Lisboa Palace.

Structural issues at Universal Entertainment and the case of Okada Manila

Universal Entertainment Corp, parent of the Okada Manila resort in the Philippines, is facing more pronounced operational pressures. Fitch downgraded its rating to 'CCC+' from 'B-' in July due to deteriorating results and structural challenges. The agency noted weaker gaming demand, increased competition, higher promotional expenses, and migration to online gaming as factors limiting recovery at Okada Manila.

Fitch documented a decline in the contribution from VIP tables: they represented 20% of the gross gaming revenue of the resort in 2025, compared to 35% in 2023. The agency believes that the structural decline of the VIP business may not be offset by growth in the mass segment with lower spending. Fitch projects an annual EBITDA for Universal Entertainment of approximately JPY19,000 million (US$120.4 million) through 2028, below the approximate level of JPY20,000 million that the agency estimates necessary to cover cash interest and capex.

Tabcorp and other companies in the peer review

The report also includes Tabcorp Holdings Ltd, an Australian betting operator, and assesses the evolution of leverage and investment pressures for each case. Fitch maintains that, despite individual difficulties, there are sector features sustaining credit quality in the region: regulatory entry barriers and exclusive or monopolistic licensing structures in various jurisdictions.

"Regulatory protection remains the region's core credit strength across the peer group," Fitch emphasizes in the report.

This statement underscores that high entry barriers and exclusive licensing frameworks differentiate the competitive dynamics of Asian gaming markets from more fragmented markets.

Practical implications for investors and suppliers

Investors must consider that downgrades reflect idiosyncratic risks linked to large projects and startup costs, not a systemic failure of the industry. For suppliers and lenders, the takeaway is that liquidity needs and capex financing will continue to be relevant in the coming years, particularly for developments like Genting New York.

Operators with expansion projects will face increased scrutiny over revenue assumptions and delivery timelines. Companies whose recovery depends on high-spending segments, such as VIP, will face additional risk if those sources do not stabilize.

What to watch in the coming quarters

Key timelines include the reported EBITDA evolution from Genting New York, SJM's deleveraging metrics following its cost savings, and the results from Okada Manila under competitive pressure and online migration. Changes in the cost of capital and financing conditions will also influence the pace at which these companies can complete their projects without compromising their ratings.

Market regulatory features will remain a mitigating factor; for related reading on compliance and supervision, see the regulation section of our coverage.

Written by Emilio Navarro, Corresponsal de tecnología del sector.