The Macau Metro Monitor, May 13th, 2010




 Bank underwriters of a $1.75 billion loan for Sands' sites 5 and 6 are expected to lose money in the secondary loan market, bankers said on Wednesday.  Banks are expected to sell the loan at 87% of face value or lower after many bank investors declined to join the loan in a lengthy four-month syndication.  The loan raised around $150MM which left underwriters overexposed to the tune of $1.6 billion.  Underwriters included Bank of China Macau ($250MM), BNP Paribas ($250MM), Citigroup ($250MM), Barclays Capital ($200MM), Goldman Sachs ($200MM), UBS ($200MM), Industrial & Commercial Bank of China Macau ($150MM), Banco Nacional Ultramarino ($100MM), DBS Bank ($75MM) and OCBC Bank ($75MM).


Sands China's loan is expected to trade at a deeper discount than fellow subsidiary Marina Bay Sands' loan, which is trading at 87% of face value, according to Thomson Reuters LPC data.  Despite higher pricing of 450 basis points over HIBOR or LIBOR, bank investors remained wary of the risk.  A senior loan syndicator, whose bank did not join the deal, said that the greenfield project and overcapacity in the Macau market weighed against his bank joining.  Two sources - one from an underwriting bank - said the deal was also kept open for covenant changes, which required banks to seek new credit approvals.



Gambling enterprises have announced that they will increase the salaries of their workers, though it is mainly for front line staff, to promote employee loyalty and attract more staff to maintain the service quality of the casinos. For example, City of Dreams have already announced for a substantial pay raise for their front line workers. But aside from a higher salary, It is still uncertain if people would be willing to retrain through government-subsidized, short-term training courses in hospitality and gaming. Also, there are concerns that higher gaming salaries may exacerbate social imbalances and entice young people to drop out of school. Nevertheless, a robust gambling industry have been a positive impact on many other industries in Macau.

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