• Las Vegas Sands' Loan Pushes Macau Casino Lending to $3.8 Bln

Dec. 2, 2005 (Bloomberg) -- Las Vegas Sands Corp., owner of the Venetian casino in Las Vegas, led this week's borrowers in Asia as its loan to expand in Macau boosts the Chinese city's gaming industry financing to $3.8 billion. Las Vegas Sands is seeking $2.5 billion to help pay for a hotel and casino resort in the territory, the company said. MGM Mirage, another Las Vegas casino company, has said it's borrowing $600 million and Wynn Resorts Ltd. earlier this year signed $764 million of loans to build in Macau. The amount of Macau gaming financing is almost a quarter of this year's total syndicated loan volume for Hong Kong companies, the region's fourth-largest loan market after Japan, Australia and South Korea. Las Vegas casino operators are expanding in Macau to tap gaming revenue that grew to $5.1 billion last year, just below the $5.33 billion generated by the Las Vegas Strip. ``These casino financings are high-yield deals with acceptable risk,'' Stephan Schmidbauer, head of Asia Pacific corporate banking at Bayerische Landesbank in Hong Kong, said in an interview. ``When loan prices are falling for most other transactions, these deals are good to have for the yield.'' Macau, a former Portuguese colony that reverted to Chinese rule in 1999, ended the 42-year monopoly of casino owner Stanley Ho in 2001. The number of visitors to Macau climbed 13 percent to 13.8 million for the first three quarters of this year, according to Macau government statistics. The territory is the only place in China where casinos are legal. Las Vegas Sands is expected to pay an initial interest margin of 2.75 percentage points over benchmark lending rates, said three bankers invited to join the loan. The arrangers are offering a fee of between 0.7 to 1.25 percent, the bankers said. Sands Presentation Goldman Sachs Group Inc., Citigroup Inc. and Lehman Brothers Holdings Inc. are arranging the casino's loan, the bankers said. The arrangers are holding a presentation for the transaction in Macau on Dec. 6, said the bankers, who declined to the named. Wynn Resorts, the casino company headed by Stephen Wynn, is paying an initial margin of 3 percentage points over the London interbank offered rate for the loan it got in September, Bloomberg data show. The margin may fall to 2 percentage points after 2007, depending on the business' debt to earnings ratio. Three-month dollar Libor, an average of rates set daily by banks and used as a borrowing benchmark, is 4.44 percent. Las Vegas Sands' long-term debt is rated BB-, three levels below investment grade, by Standard & Poor's. Moody's Investors Service rates it B2, five steps below investment grade. S&P gives Wynn Resorts' long-term debt a B+ rating, four levels below investment grade. City Developments In other deals this week, City Developments Ltd., Singapore's second-biggest property company, is seeking as much as S$600 million ($355 million) of loans and bonds to replace more expensive debt, bankers involved in the transaction said. City Developments may pay a margin of less than 0.5 percentage points over the Singapore interbank offered rate for a term loan, the bankers said. The company pays a margin of 0.7 percentage point on an existing credit. Three-month Sibor was 4.44 percent yesterday. DBS Group Holdings Ltd., HSBC Holdings Plc. and Norddeutsche Landesbank GZ Singapore are arranging the loan, the bankers said. Hong Kong & China Gas Co., the city's only piped-gas supplier, is seeking as much as HK$3 billion ($387 million) to replace shorter-term debt, said bankers asked to join the loan. Citigroup, the arranger of the credit, is offering lenders an all-in yield, which includes interest margins and fees, of 0.22 percentage point more than the Hong Kong interbank offered rate, the bankers said. Three-month Hibor was 4.28 percent yesterday.

> Read the full story here Source: Bloomberg.com

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