MGM Resorts Credit Rating Affirmed at Junk by Fitch

Posted on: March 20, 2025, 04:13h. 

Last updated on: March 20, 2025, 04:13h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • Casino operator affirmed at “BB-“
  • MGM credit outlook “stable,” according to Fitch

MGM Resorts International’s (NYSE: MGM) credit rating was affirmed at “BB-“ — three notches into non-investment-grade territory — by Fitch Ratings.

MGM
Cosmopolitan Las Vegas. Operator MGM’s credit rating was affirmed as junk by Fitch. (Image: Las Vegas Sun)

The research firm applied a “stable” outlook to the casino operator’s credit profile, noting the rating is reflective of MGM’s stout competitive positioning in Las Vegas where it’s the largest operator on the Strip. Fitch added the Cosmopolitan operator trades at 5x earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR), which is “is commensurate with the rating,” but there are some offsets to the rating.

These positive factors are offset by the company’s active development plan, earnings volatility from high-end play in both Las Vegas and Macau, increasing cost pressure, and lack of ownership of its properties, which could affect financial flexibility during weaker economic conditions,” notes Fitch.

The ratings agency says MGM’s stable outlook is indicative of the operator’s ability to keep leverage steady while maintaining enough liquidity to manage future growth outlets, such as MGM Osaka and the possibility of converting Empire City Casino in New York to a traditional gaming venue.

MGM Strategy Cash Policy a Plus

MGM concluded 2024 with $2.41 billion in cash and cash equivalents, which goes a long way toward meeting the operator’s objective of carrying liquidity of at least $3 billion.

When its financial flexibility exceeds that amount, the gaming company as Fitch notes, can indulge shareholder rewards including buybacks. Last year, MGM repurchased $1.4 billion worth of its own stock, extending a run in which it has pared its shares outstanding tally by 40% since 2021.

Fitch also praised MGM for a strong asset mix in the US where it’s not only the dominant operator on the Strip, but the company behind some of the top-grossing regional casinos as well.

“MGM has good geographic diversification, which includes its Las Vegas Strip properties, diverse regional gaming portfolio, and Macau assets. MGM’s portfolio has many high-quality assets on the Strip, and its regional assets are typically market leaders,” adds the research firm. “The regional portfolio’s diversification partially offsets the more cyclical nature of Las Vegas Strip properties.”

BetMGM Could Help Over the Long-Term

While highlighting the diversification benefits offered by iGaming and online sports wagering, Fitch noted BetMGM isn’t yet a material driver for MGM’s top and bottom lines.

“Fitch expects the 50% proportional EBITDA of BetMGM to be an immaterial portion of total MGM property EBITDAR in 2025 as the company reinvests in customers and its product offering,” according to the ratings agency. “MGM has made other investments in its iGaming platform,but is expected to focus on driving growth and profitability in its existing operations in the near-term.”

The fate of BetMGM, which is expected to be profitable this year, is often discussed because there’s lingering speculation regarding MGM potentially floating another takeover bid for Entain (OTC: GMVHY) or buying that company out of BetMGM. The two gaming firms each own 50% of BetMGM and it’s widely known that the casino giant would like full control.