Research: Rating Action: Moody’s Confirms SJM Holdings Ratings After Refinancing Completes; negative outlook

Hong Kong, 27 June 2022 — Moody’s Investors Service has affirmed SJM Holdings Limited’s Family of Companies (CFR) rating Ba3 and B1 rating on senior unsecured collateralized notes issued by Champion Path Holdings Limited and guaranteed by SJM .

Moody’s has also revised the outlook for these entities to negative with respect to the ratings under review.

This concludes the decommissioning review initiated on October 25, 2021.

“The confirmation of the ratings reflects the completion of the refinancing of SJM’s loan facilities, which now provide the company with adequate liquidity for at least the next 12 months,” said Sean Hwang, assistant vice president and analyst at Moody’s.

“That said, the negative outlook reflects the high uncertainty surrounding the pace and extent of SJM’s earnings recovery, and our view that SJM’s financial leverage is likely to remain very high over the next 12 to 18 months,” Hwang said.


SJM announced on June 23, 2022 that it had executed its HKD 9 billion term loan facility and HKD 10 billion revolving credit facility with a syndicate of banks. The seven-year loan facilities will be used to repay SJM’s existing loans and rebuild its liquidity.

Following the refinancing, SJM no longer has large debt maturities until January 2026, while its new term loan will be amortized quarterly in modest amounts beginning in September 2023. SJM cash and availability under the revolver – totaling HKD 6.0 billion to HKD 6.5 billion as estimated by Moody’s – will be enough to cover its cash requirements for at least the next 12 months, including some construction payments due during this period and the consumption of cash which is expected to continue through the end of 2022.

Moody’s expects SJM’s adjusted debt – including lease debt – to grow to around HKD 30 billion over the next 12-18 months, from HKD 23.6 billion at the end of 2021. This forecast takes into account the expected decline of the revolver during this period and the 1 HKD. 9 billion convertible bonds of the Sociedade de Turismo e Diversões de Macau (STDM) for the acquisition by SJM of the Oceanus property.

At the same time, SJM’s revenue recovery is likely to be prolonged, as highlighted by the recent resurgence in Covid cases and tightening travel restrictions in Macao SAR, China. Moody’s currently assumes Macau’s mass market gaming revenue will be around 40% of 2019 levels this year, before rising to 80% in 2023, with a full recovery in 2024. recover significantly due to the regulatory crackdown on junkets. .

Given the above expectations, Moody’s expects SJM’s Debt/Adjusted EBITDA to exceed 10x in 2023 and only fall to 5.1x in 2024. This level of financial metrics in 2024 is still commensurate with the Ba3 CFR of SJM, but significant risks exist on the assumed pace and magnitude of the earnings recovery, driving the negative outlook.

SJM’s Ba3 CFR continues to reflect its established gaming operations in Macau given its more than 50-year operating history, as well as the company’s conservative financial track record, which mitigates the risk associated with its geographic focus in Macau.

Champion Path Holdings Limited’s B1 senior unsecured note rating is one notch lower than SJM’s CFR, as bank loans and subsidiary level liabilities will remain a significant part of SJM’s liability structure even after refinancing, and will therefore have priority over senior unsecured claims. to the holding company in a default scenario.


SJM Holdings’ ESG credit impact score is very negative (CIS-4), mainly reflecting its very negative exposure to social and governance risks.

SJM’s social risks are mainly related to the responsibility of gambling operators to prevent money laundering and compulsive gambling, as highlighted by the review of the Macau Gambling Law in 2022. SJM also faces long-term risks related to changing consumer preferences that may not favor traditional casino games. However, this risk is partly offset by the growth in entertainment spending and the limited threats from online gambling in Asia.

SJM’s governance risks primarily reflect STDM’s concentration of ownership and control of SJM and the past delay in processing loan maturities, which has raised some concern over the execution of the financing and the management cash from SJM. These risks are offset by SJM’s track record of conservative financial strategy.


An upgrade to SJM’s ratings is unlikely at this time given the negative outlook.

Moody’s could revise SJM’s outlook to stable if SJM improves earnings, contains debt growth and maintains adequate liquidity. Indicative credit metrics for this scenario include SJM Adjusted Debt/EBITDA falling below 5.5x on a sustainable basis.

Moody’s could downgrade SJM’s ratings if the rating agency expects the company’s adjusted debt/EBITDA to remain above 5.5x, due to prolonged earnings weakness or an increase in debt higher than expected. This could be the result of the impact of a prolonged pandemic.

The main methodology used in these ratings is Gaming published in June 2021 and available at You can also visit the Scoring Methodologies page at for a copy of this methodology.

SJM Holdings Limited develops and operates casinos and integrated resort facilities in the Macau SAR. The company is listed on the Hong Kong Stock Exchange and is 54% owned by Sociedade de Turismo e Diversões de Macau (STDM).


For details on key rating assumptions and Moody’s sensitivity analysis, see the Methodological Assumptions and Sensitivity to Assumptions sections in the Disclosure Form. Moody’s rating symbols and definitions can be found at

For ratings issued on a program, series, category/class of debt or security, this announcement provides certain regulatory information regarding each rating of a subsequently issued bond or note of the same series, category/class of debt, security or under a program for which ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a media provider, this announcement provides certain regulatory information relating to the credit rating action on the media provider and each particular credit rating action for securities whose credit ratings are derived from the support provider’s credit rating. For the provisional ratings, this press release provides certain regulatory information relating to the provisional rating assigned, and to a final rating that may be assigned after the final issuance of the debt, in each case where the structure and conditions of the transaction n have not changed prior to the final rating being assigned in a way that would have affected the rating. For more information, please see the issuer/transaction page of the respective issuer at

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The first name below is the primary rating analyst for this credit rating and the last name below is the person primarily responsible for approving this credit rating.

Sean Hwang
Assistant Vice President – Analyst
Corporate Finance Group
Moody’s Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queens Road
China (Hong Kong SAR)
JOURNALISTS: 852 3758 1350
Customer Service: 852 3551 3077

Chris Park
Associate General Manager
Corporate Finance Group
JOURNALISTS: 852 3758 1350
Customer Service: 852 3551 3077

Release Office:
Moody’s Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queens Road
China (Hong Kong SAR)
JOURNALISTS: 852 3758 1350
Customer Service: 852 3551 3077

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