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Two Sin City Casino Properties Wooing Investors amid the COVID-19 Outbreak
By GP News Team Mar 09, 2020 IndustryBlackstone Affiliates and MGM are scanning through the bond market for investors in their Vegas casinos in the face of the shaky market after the Coronavirus epidemic.Let’s face it, Coronavirus is now a global pandemic, and 82 countries, including the United States, have fallen victim to it. It has disrupted everything from the Olympics to international travels to business and now the Stock market. Well, Investors have finally decided not to go down without a fight.
Wall Street banks are not entertaining any more of the coronavirus ruckus to get in the way of an already arranged $2 billion property bond to bankroll the fancy Mandalay Casino, MGM Grand and restaurants sited in the Vegas Strip.
Blackstone Group affiliates closed a deal with MGM to buy the luxurious casino and resort properties for over $4.6 billion where a clutch of banks led by Citigroup will be its main financiers. Furthermore, they have also called in bond-market investors and creditors as well to contribute.
As of now, Moody’s Investor Service is offering new bonds, marked as Triple-A to Ba2 for sale during this time of crisis where the rapid spread of Coronavirus has jolted the stock markets. Such moves appear to cause a lot of uncertainties and, many investors are nervous that there might be a Stock market crash from the COVID-19 outbreak.
The Stock Market is Not Looking Good
On Friday again, all the major U.S. stock indexes plunged sharply where Dow Jones Industrial Average DJIA was closing with 257 points lower with -0.98%. At the same time, Treasury Note TMUBMUSD10Y with a 10-year record of hitting all-time high finished with a low of 0.430% at the Overnight Trade on Friday.
In an interview with Marketwatch, Jenn Ripper, an investment guru at PennMutual Asset Management warned that now is not the ideal time to bring huge deals to the market. He also affirmed that the tourism industry in the U.S. now faces doubt from a possible pullback on spending by businesses and consumers on travel.
Several other investors also said that the largest slice with a AAA rating of the 10-year bond bankrolling the Mandalay Bay and the MGM properties were being bought at a spread of about 125 basis point through a safe benchmark. That compares to the Deutsche Bank data of 10-year AAA-rated spread of 97 basis points for business mortgage bonds at the start of this week.
In case you didn’t know, the spread is the level of reparation that investors claim for owning security above a risk-free benchmark, for example, the U.S. Treasury. If there are higher levels of spread, they will often indicate nervousness in the stock market.
Moody’s Still Optimistic Despite the COVID-19 Threat
Moody’s also devoted a section of its bond presale report to the potential risks posed by the coronavirus epidemic. In his statement, he stated that even though Coronavirus continues to spread globally, its full effect is not possible to forecast as it is in its early stages.
Joseph Podvaney, the leader of the Moody’s team and the author of the report, also added that the virus could still have a costly impact on Las Vegas Lodging demand. Even though it still too early to wrap our heads around the outbreak’s effects on the U.S. or even China for that matter, a tally of abrupt fallout to specific sections of the stock market has already started. Las Vegas property executives like Wynn Resorts Limited, for instance, have already cautioned their investors on the effects of the outbreak to their businesses in recently released annual reports.
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