• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here


    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

The Macau Metro Monitor, March 8th, 2010


As LVS's US $1.75BN five-year loan deal draws to a disappointing close, eyes are now focused on Galaxy's HK$7BN (US $903MM) six-year financing package, which is expected to hit the market by the end of March 2010. LVS's financing struggles to find lenders as only four banks have joined in syndication so far, committing US$100MM in aggregate. Total commitments in general for Sands are expected to come to less than US$300MM or a selldown of less than 17% of the $1.75BN loan commitment, which is comprised of a $750MM Term Loan A, $750MM delay draw Term Loan B, and a $250MM R/C - tranche C. Banco Nacional Ultramarino, BoC (Macau), BNP Paribas, Barclays Capital, Citigroup, DBS, Goldman Sachs, ICBC (Macau), OCBC and UBS were the loan underwriters.

Galaxy's loan syndication has already run into several roadblocks, including: 1) Bank of China (Macau) rumored to have dropped out after it failed to obtain credit approval, supposedly as a result of China's tightening of  bank lending  2) BoA/ ML,  which was initially mandated to arrange the HK$6-$9BN bond and loan financing package, is now rumored to be handling the capital markets portion only. 3) Coming on the heels of a cold Sands deal could mean that lender exposure to Macau will be saturated, especially if syndication efforts prove less successful than hoped.

However, since Galaxy is a debut borrower and results at its flagship property, StarWorld, have been strong, they may have an easier time attracting capital then Sands - which banks already have a high exposure to. Galaxy Macau Resort, needs an additional HK$9BN funding to complete the HK$14BN project. Galaxy’s facility will have a term of less than five years and all-in spread of 500bps.


Sheldon Adelson said that LVS is gearing up to launch the sale of the Four Seasons apartment hotel tower in a cooperative form of ownership, at the Deutsche Bank 2010 Hospitality and Gaming Conference last week. This new agreement with the Macau Government seems to placate Macau lawmakers such as Au Kam San, who argued that the sale of serviced apartments on the lucrative Cotai Strip represents a flagrant example of profiteering.

“We want to sell the apartments just to players who lock in their loyalty to where they own their apartment,’’ Adelson said, “If we proceed in selling co-ops, I believe that the future and the perception of our company will change for the better, dramatically.”  Michael Leven, LVS's COO, said at the Reuters Travel and Leisure Summit that the co-op sales would bring in more than $1 billion.

UP Destination Macau

According to DM, the strong results seen in the last week of February will continue into March and that 2010 may even see a month where results break MOP 20BN (likely in November).  DM explains that whenever Macau experiences a surge in visitation, such as a Golden Week, there is usually a secondary pop about a week to two afterward when the friends of those who came in previously hear about all the new attractions and games that they missed out on, therefore decide to go and see for themselves. DM's consumer surveys show that more than two-thirds of Macau visitors come on the “advice and recommendation of a friend/relative”.  Hence, a strong CNY is followed by several strong weeks of visitation and gaming revenues.

 DM believes that even though credit may be tightening on the mainland, it's impact on Macau is being over shadowed by huge new wealth growth. DM sees overall red-hot gaming revenue growth, with month-on-month dips in April, June and September.

WYNN AND SANDS, RULE OK? Destination Macau

The DM is optimistic on the management team of Sands China under Steve Jacobs rule, in driving performance results, as every square inch of their properties is being questioned and examined to improve efficiency. DM believes that Sands EBITDA can exceed the $1BN mark in 2010.There are some delays on construction resuming on Lot 5&6, but those are most likely temporary.  

DM continues to expect outperformance from Wynn Macau especially as Encore opens and brings much needed room capacity to the property. 


Fernando Chui Sai-on delivers his first policy address a week from Monday. He will address the biggest headache facing the people running some of Macau's best casinos over how to raise their service standards by developing their staff better. Chui is ready to make labor importation a priority again, so don't expect an explosion of Blue Card approvals anytime soon. In addition, Chui will comment on how to make money for everyone important who doesn't necessarily own a casino license in Macau. He wants to reinstate the migrant investment scheme which is great news for those with property to sell, like Shun Tak and Sands China.


According to The Macau Post Daily, which quoted Ho Iat Seng, a Macau member of the Standing Committee of the National People's Congress (NPC), China's Vice President Xi Jinping said that Macau needed to adjust, control and monitor the gaming industry in order to ensure its orderly development. Xi stressed that while Macau's outlook was good, there was a need to grasp hold of key opportunities, particularly the opening-up of Hengqin Island, in order to create a climate of sustainable development in Macau.