Sands China keeps debt manageable despite pressure on earnings

Sands China Ltd placed a note offering on Wednesday for US$1.0 billion, and analysts say its debt level remains manageable despite pressure on its earnings in [Macao](/casino). The issuance includes US$700 million at a 6.4% coupon maturing January 2032, and US$300 million at a 6.7% coupon maturing November 2033.

Deal structure and use of proceeds

The company, a subsidiary of U.S.-based Las Vegas Sands Corp., confirmed in a filing that the net proceeds from the offering amount to US$989 million. Sands China said those proceeds, together with available cash, will be used to redeem US$700 million of notes due March 2027, repay borrowings under its revolving credit facility and for general corporate purposes, including capital expenditure. Credit rating agencies treated the offering as balanced: Fitch Ratings and S&P Global Ratings assigned a ‘BBB’ rating to the proposed notes.

CreditSights assessment and leverage metrics

CreditSights published a memo on Tuesday noting that growth in gaming volumes and an improvement in market share provide some comfort after a challenging third quarter. The report calculated gross leverage at approximately 2.8 times and net leverage at 2.3 times as of the end of September.

The firm recorded total debt of approximately US$6.3 billion and cash of US$1.1 billion, leaving net debt around US$5.2 billion. Gross leverage remained broadly unchanged quarter on quarter, while net leverage improved slightly due to a higher cash balance.

Liquidity, maturity schedule and ratings outlook

S&P Global Ratings commented that the refinancing pushes the next material maturity to August 2028, when notes amounting to US$1.9 billion fall due. Fitch expected the US$2.5 billion revolving facility to be fully available after the repayment with proceeds from the offering, and viewed liquidity and access to capital markets as sufficient to cover near-term needs.

CreditSights also positively noted that the company had addressed its near-term maturity and reduced outstanding balances on the revolving facility.

Operations and performance in Macao

CreditSights recorded that Sands China’s adjusted EBITDA for the third quarter fell 12% year-on-year to US$529 million, and that its EBITDA margin declined to 27.3%, a drop of 4.2 percentage points from the same period a year earlier. Despite that, gaming volumes rose across all segments and CreditSights’ estimated overall Macao market share increased to 25.5%, from 23.7% the prior quarter and 23.5% a year earlier.

Fitch emphasised that scale, competitive position and cash flow generation support Sands China’s credit profile, although development spending and weak Chinese consumer spending remain constraints.

Impact of refurbishments and management comments

CreditSights indicated that the room refurbishment at The Venetian Macao will take an average of 500 rooms out of service until Q4 2027, with reopening targeted for Chinese New Year 2028. On the third-quarter earnings call, Sands China’s management said the company had “received very strong feedback from the customers who have experienced the new suites”, after having returned about 600 units of The Venetian Macao to the market.

Sands China operates The Venetian Macao, The Londoner Macao, The Parisian Macao, Plaza Macao on Cotai and Sands Macao on the peninsula; its Macao portfolio remains the focal point for analysts' financial and liquidity assessments.