Near-Term Debt Maturities for Casino Operators Are Limited

Deutsche Bank Highlights Limited Near-Term Debt Maturities for Major Casino Operators

Deutsche Bank analyst Carlo Santarelli previously notified investors that gambling businesses that participate in trading openly had “relatively limited” deadlines in 2024 and 2025. Furthermore, he said that of the 12 casino businesses monitored by the bank, just five have outstanding debt that is expected to be settled either this coming year or in 2025. Gaming & Leisure Properties (NASDAQ: GLPI), Wynn Resorts (NASDAQ: WYNN), MGM Resorts International (NYSE: MGM), and Las Vegas Sands (NYSE: LVS) are the five firms comprising that pairing.

Santarelli also said which the majority of the five previously identified forthcoming debt is associated with appealing costs, and therefore the casino operators are unlikely to benefit a lot from renewing the funds. That would be true irrespective of the extent to which interest rates decrease in the next months.

Reduced Interest Rates Will Assist Casino Loans

Although not all of the aforementioned casino owners are in a haste to restructure their debt, the sector as a whole stands to gain from reduced base rates.

Our assessment is that those with more fluctuating debt compositions may anticipate a period of relief during the next six to twelve months. “Our study indicates that in 2025, the starting rate decrease is going to have the greatest favourable and conspicuous impact on optional free cash flow.” Santarelli said.

Santarelli predicts that if interest rates drop by 150 basis points in 2025, Wynn, Penn Entertainment, Boyd Gaming, Caesars Entertainment, Golden Entertainment, Light & Wonder, Penn, Red Rock Resorts, and Wynn will all see increases of at least 3% to their discretionary free cash flow.

Caesars would save $91.1 million in interest payments per year, at the upper end of that range, if interest rates were to decrease by 1.5%. According to the estimations provided by Deutsche Bank, Sands comes in at $42.1 million. Golden Entertainment has the best free cash flow percentage at 7.3% assuming rates decrease 150 basis points.

Primary Short-Term Challenges Confronting Casino Operators

The biggest 2025 maturities will be faced by Las Vegas Sands and VICI, if no refinancing occurs in the near future. According to Deutsche Bank, Sands has $2.121 billion in bonds maturing next year with a combined interest rate of 4.6% and VICI has $2.050 billion expiring next year with a blended interest rate of 4.2%. In addition, VICI’s casino operator tenants have long-term contracts with periodic rent increases, which helps to see how much money is coming in. This long-term visibility provides a stable financial outlook for VICI, even as significant debt maturities approach. Furthermore, the gradual rent escalations embedded in these contracts offer additional security against inflationary pressures.