KUALA LUMPUR: Genting Bhd
and Genting Malaysia Bhd (GENM) face increased credit rating downgrade risk following Genting’s RM3.1 billion acquisition of additional shares in GENM, according to CreditSights.
In its latest research note, the firm said both entities are now closer to the downgrade triggers set by major rating agencies.
"We now see a high likelihood of rating downgrade risk for Genting at Moody’s and Fitch, and for GENM at Fitch,” it said.
CreditSights said that on a pro forma basis, using Genting’s nine-month 2025 numbers, the group would have breached all downgrade trigger ratios at Moody’s and Fitch.
"We project pro forma retained cash flow to net debt at 17 per cent, compared with Moody’s downgrade trigger of below 20 per cent to 25 per cent.
"(We also estimate) gross leverage at 5.9 times against Moody’s trigger of above four times, and earnings before interest, taxes, depreciation and amortisation net leverage at over five times, exceeding Fitch’s trigger of above 3.5 times,” it said.
CreditSights said that if GENM’s Miami land sale does not materialise in the financial year 2026, Genting is expected to remain in breach of the rating downgrade triggers throughout that period.
"If the Miami land sale materialises in financial year 2026, Genting may narrowly avoid breaching Moody’s and Fitch’s downgrade triggers, though we view the sale as a long shot that both rating agencies are unlikely to factor in,” it said.
CreditSights said a downgrade of Genting by Moody’s and Fitch would place its ratings at "Baa3” and "BBB-”, respectively, with GENM’s ratings remaining tied to Genting.
The firm said it maintains a "Market Perform” recommendation on Genting and an "Outperform” call on GENM.
On Monday, it was reported that GENM will remain listed after Genting secured less than the 75 per cent required under its privatisation bid.
In a filing with Bursa Malaysia, Genting said that as at 5 pm on Dec 1, it had obtained a 73.133 per cent interest in GENM at the close of its offer, with a further 0.202 per cent in acceptances pending verification. - Bernama
