KUALA LUMPUR (Oct 13): Genting Bhd (KL:GENTING) may need to sell non-core assets, particularly unused land, to reduce its debt burden and avoid further credit-rating downgrades, according to CreditSights.
The credit research firm said Genting's proposed RM1.25 billion rights issue was a welcome move to reduce its reliance on borrowing, although it expects only a modest improvement in the group's financial position.
"We believe non-core asset sales will be the main tool to stave off downgrade risks," CreditSights said in a report.
The firm warned that Genting remains at risk of losing its investment-grade credit rating, given its heavy debt burden and substantial spending commitments.
It also identified possible dividend cuts, further fundraising and stronger earnings as ways for Genting to improve its finances.
CreditSights highlighted a US$618 million (about RM2.5 billion) bond maturing in January 2027, although it expects Genting to manage the repayment through existing cash and potentially fresh borrowings.
The firm also flagged Genting's heavy investment in its Resorts World New York City casino expansion as a risk, particularly if the spending fails to generate sufficient earnings.
While it noted an earnings recovery at Resorts World Las Vegas in the first half of 2026, sustaining that improvement remains important to the group's financial outlook.
CreditSights also expects Genting to avoid further debt-funded attempts to increase its stake in Genting Malaysia Bhd (KL:GENM) over the next 12 to 18 months to preserve its financial strength.
Genting currently owns about 73.8% of Genting Malaysia, which operates Resorts World Genting and gaming businesses overseas.
In October 2025, Genting launched a RM6.7 billion takeover offer at RM2.35 per share to acquire the remaining Genting Malaysia shares it did not own, with the aim of potentially taking the subsidiary private.
The offer closed in December without achieving privatisation, although Genting increased its shareholding to 73.13%.
The latest assessment follows Genting's announcement last Friday of a RM1.25 billion rights issue, mainly to repay borrowings and strengthen working capital.
CreditSights expects the exercise to secure shareholder approval, supported by the Lim family's commitment to subscribe for its full entitlement. The family collectively holds a 45.1% stake in Genting.
The announcement sent Genting shares plunging nearly 23% to RM1.45 on Monday, their lowest since April 2007.
Shares of Genting were up three sen or 2.07% at RM1.48 as at 10.32am on Tuesday, valuing the group at RM5.74 billion.
CreditSights maintained its "outperform" recommendation on Genting's US dollar perpetual securities and "market perform" recommendation on its senior debt.