S&P Global Ratings on May 14 upgraded its issuer credit ratings on Wynn Resorts Ltd. and its subsidiaries to BB from BB-, following the resolution of investigations that placed the company's suitability, and licenses in Nevada and Massachusetts at risk.
The Las Vegas-based hotel and casino operator is facing $55 million in total fines from both states over the company's handling of misconduct allegations against former CEO Steve Wynn.
The rating agency said it believes Wynn Resorts will maintain its license in Massachusetts and that the company can absorb the fines after gaming regulators completed their investigations into the company's suitability.
Ratings added that the conditions imposed by the probe will not materially disrupt the opening of Encore Boston Harbor or Wynn Resorts' operations.
The agency also raised the group's issue-level ratings one notch in line with the issuer credit rating, with a stable outlook, reflecting Ratings' expectation that the company's leverage will be in the low-4x area in 2019 despite some operating volatility.
Ratings also removed the group from CreditWatch positive, where they were placed Jan. 31.
The rating agency expects 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 the group's cash flow growth and improved leverage of about 4x in 2020.
Ratings said an upgrade is unlikely over the next two years as Wynn Resorts' leverage is expected to remain at about 4x. The agency added that it could lower the ratings if the company sustains leverage above 5x, funds from operations to debt below 12% and EBITDA coverage of interest below 3x.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.