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Las Vegas Sands draws down $2b for S’pore IR

LAS Vegas Sands Corp, the world’s largest casino operator by market value, has drawn down $2 billion from its credit facility for the building of a Singapore casino, it said in a statement yesterday.

The company is paying an interest margin of 3.6 percentage points more than the 30-day Singapore dollar swap offer rate, it said in the statement.

Las Vegas Sands got its initial funding for the integrated resort in Singapore at a time when the credit markets are roiled by rising borrowing costs due to concern about losses in US sub-prime mortgages. The Singapore dollar one- month rate is at 1.5 per cent, 2.5 percentage points lower than the one-month London interbank offered rate (Libor), a benchmark for US dollar borrowings.

‘The credit facility, which is the largest private Singapore dollar-denominated financing ever completed, will provide flexible and cost effective financing’ for the gaming resort, Sheldon Adelson, chairman of the casino company, said in the statement. ‘We are quite gratified that the Singapore interest rate is significantly below the rates which we would have to incur in the US or other international markets in today’s market.’

About 42 per cent of the US$24.8 billion that loans companies received in Singapore in 2007 are in the local currency, compared with 25 per cent of US$26.1 billion of debt for 2006, according to data compiled by Bloomberg.

‘Bank liquidity is extremely strong in Singapore,’ said James Chua, who helps manage US$450 million at Phillip Capital Management Ltd in Singapore. ‘This is a low-risk project due to the duopolistic nature of the casinos and the high execution skill of Las Vegas Sands.’

Singapore Prime Minister Lee Hsien Loong’s government has pledged to allow only two casinos in country in the next 10 years. The nation ended a four-decade ban on casinos in a bid to triple tourism revenue to $30 billion by 2015.

The other casino licence was awarded to Malaysia’s Genting International plc, owned by Kuala Lumpur based Genting Bhd. Genting is building a casino resort on Sentosa island.

The Singapore resorts will capture a slice of the regulated gambling market in the Asia-Pacific region, expected to expand 15.7 per cent a year to US$30.3 billion in 2011, according to PricewaterhouseCoopers LLP. The loan will also test the city-state’s debt market, where more loans are being issued in the local currency.

Las Vegas Sands hired eight banks, including Goldman Sachs Group Inc and Singapore-based companies DBS Group Holdings Ltd, Oversea-Chinese Banking Corp and United Overseas Bank Ltd, to arrange the $5 billion borrowing, according to three people, who declined to be identified because the information is private, on Sept 20.

The other four arranging banks are Morgan Stanley, Merrill Lynch & Co, Lehman Brothers Holdings Inc and Citigroup Inc.

The casino company’s debt is rated three steps below investment grade at ‘Ba3’ by Moody’s Investors Service and an equivalent ‘BB-‘ by Standard & Poor’s.

Las Vegas Sands’ downtown Marina Bay resort, next to Singapore’s business district, will feature three hotel towers linked by a sky garden, a convention centre, restaurants run by celebrity chefs Charlie Trotter and Thomas Keller, and an art-and-science museum.

 

Source: Bloomberg Business Times 17 Jan 08

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