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The Macau Metro Monitor, May 14th, 2010

MGM GRAND MACAU TARGETS $850 MLN LOAN Reuters

MGM Grand Macau aims to refinance its existing $1.1 billion facility ahead of its IPO, according to sources.  The refinancing is expected to comprise a term loan and revolving credit, both with five-year maturities.  The $1.1 billion financing was led by Banc of America Securities Asia, Banco Nacional Ultramarino, Bank of China Macau, BNP Paribas, CCB International Finance, Hang Seng Bank, HSBC Holdings, Royal Bank of Scotland and Sumitomo Mitsui Banking Corp.  HSBC is the agent bank.  Sources said MGM was expected to favor a 10-15 bank club to complete its loan.


WHITHER THE SANDS EMPIRE NOW? Intelligence Macau

Even with the loss of Cotai architect Stephen Weaver, Sheldon Adelson is not slowing down in driving his company to capture more and more ambitious ventures.  According to IM, while Adelson is lauded for his vision and achievements in Asia, he is also known for a strong appetite for risk.  Here are some concerns: 1) How can LVS get past the government foreign labor quota?  There are only 2,000 local construction workers available for a project that requires 5,000, half of the estimated 10,000 needed for the Cotai project.  2) Because of the large loans outstanding, cash flow from MBS is not not going anywhere except back into the pockets of the Singaporean banks for the foreseeable future. 3) Risk for LVS debt-holders ballooned after the $1.75BN loan failed to sell down.  4) Using cash flow from Macau to fund other ventures such as Japan, in addition to retiring the Macau debt, could hamper fiscal management, particularly if the Chinese property market blows up.


MBS: THE WORLD'S NO.1 RESORT, JUST NOT YET Intelligence Macau

MBS is facing a number of maintenance problems right now, including power outages and water leakage.  But IM consultants are more optimistic about MBS on a bigger picture.  Consider this: all a VIP player needs to do is deposit S$100,000 in the casino account to qualify as a VIP player.  The amount he loses to the casino will be taxed at just 12%.  Compare that to Macau, where 40% goes to the government and 40-55% goes to the junket operator.  It's a no-brainer: the volumes only need to be a fraction of Macau's in order to generate similar revenues.

Will gross gaming revenues be anywhere near the Venetian Macao's?  Not likely, without junkets.  Is the growth trajectory going to be anything like Macau's?  No chance: the number of tables on the MBS mass gaming floor today is the same number that will be there in 2020.  But this is a true integrated resort. It should have no problem paying back its creditors with the cash flow generated by all of its components.

VISITOR EXPENDITURE SURVEY FOR THE 1ST QUARTER 2010 DSEC

Per-capita spending of visitors increased by 9% YoY to MOP 1,783 in the first quarter of 2010.  Analyzed by place of residence, per-capita spending of Mainland visitors took the lead, at MOP 2,826.  Although gaming expenses are not considered in the per-capita spending of visitors, about 53% of the interviewed visitors in the first quarter claimed that they had participated in gaming activities during their stay in Macao.  The average length of stay of visitors shortened by 0.1 day to 1.0 day over the first quarter of 2009, with Mainland visitors staying an average of 1.1 day.

PACKAGE TOURS AND HOTEL OCCUPANCY RATE FOR MARCH 2010 DSEC

Visitor arrivals in package tours decreased by 7.7% YoY to 510,679 in March 2010.  Visitors from Mainland China (355,300) and Taiwan, China (25,225) dropped by 18.8% and 5.9% respectively.  At the end of March 2010, total number of available guest rooms of the hotel sector increased by 1,831 (+10.4%) YoY to 19,408 rooms.  The average occupancy rate of hotels and guest-houses increased by 4.9 percentage points year-on-year to 77.5% and that of hotels reached 78.2%, with 4-star hotels leading at 84.6%.

ALTHOUGH NOT YET THE HOLIDAY SEASON, BOOKINGS FOR HOLIDAYS HAVE ALREADY SOARED Macau Daily News

A manager from one of Macau's travel agencies, Li Yong Xuan indicated that holiday travel from Macau is very promising.  A 3% increase for travel bookings in May and June YoY.  Singapore remains the most popular travel destination this year.  Prices for summer tours through Southeast Air is about 1000 yuan more expensive than usual.  Macau Air has launched charter flights during this period but only up until June.


INDONESIAN AIRLINE TO SERVICE MACAU JULY 21 Macau Daily News

Indonesian low cost carrier Mandala Airlines will start flying to Macau on July 21.  Mandala Airlines Managing Director Diono Nurjadin responded to reinstate flights between Macau and Jakarta following the suspension of the Macau-Jakarta route served by Viva Macau.