Wynn Resorts (WYNN) had its credit rating raised by S&P Global Ratings on Tuesday on expectations that the risks to operations from regulatory reviews have been scrapped after investigations in Nevada and Massachusetts were resolved.
The rating was lifted to BB from BB- and it was removed from CreditWatch positive, where it was placed on Jan. 31. The outlook on the casino company is stable, which S&P said reflects its view that leverage will be in the low four times area this year.
“We expect the ramp up of operations at Encore Boston Harbor, returns on investment from the renovations at Wynn Macau, the opening of new convention space in Las Vegas, and continued growth at Wynn Palace will support cash flow and improved leverage of about 4x in 2020,” S&P said in a note.
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Massachusetts levied a $35 million fine on Wynn for failing to disclose sexual misconduct allegations against its founder and former chief executive, Steve Wynn, but allowed the company to retain its gaming license, it said in a regulatory filing.
In February, Wynn said the Nevada Gaming Commission’s regulatory process was completed after also investigating the allegations against Steve Wynn.
“The upgrade reflects our view that the risk of disruption to operations (from loss of licenses or onerous penalties) is gone following the resolution of license investigations,” S&P said.
Investments that will be completed this year and in early 2020 will help cut leverage to 3.8 time to four times, providing “sufficient cushion for the company to absorb any potential addition development spending to expansion at Wynn Palace that could begin later in 2020,” the ratings firm said, referring to the property in the Asian gaming hub of Macau.