Fitch Ratings has rated Japan-based Universal Entertainment Inc's long-term issuer default rating (IDR) and U.S. dollar senior bonds as "rating watch negative".
The conglomerate is the parent of Tiger Resort, Leisure and Entertainment Inc., the founder of Okada Manila Casino Resort in Manila, the capital of the Philippines.
Fitch's actions against its parent company "reflect the fact that the $760 million note due in December 2024, which makes up the bulk of the company's debt, is nearing maturity," the rating agency said in a note on Wednesday.
Fitch added: "While the company [Universal Entertainment] is at an advanced stage of executing its refinancing plan, there is no legally binding commitment to refinancing."
The agency also added, "Fitch will address 'negative credit ratings' if the company successfully repays its debt. Delays in repayment execution are likely to lead to further negative action."
Fitch also said: "While our analysis suggests that all debt instruments will be fully recouped, we note that a significant portion of Universal Entertainment's corporate value is linked to assets located in the Philippines."
Okada Manila's business generated net sales of approximately 20.38 billion yen ($132.2 million) in the first quarter, or 59.2% of Universal Entertainment's consolidated net sales of approximately 34.43 billion yen in the first quarter.
As a result of Universal Entertainment's exposure to the Philippine market, Fitch said, "National caps will apply to the Philippines, which will limit the recovery rating to 'RR4' based on the recovery rating criteria.
Fitch said it expects Okada Manila's business growth to be "moderate" this year.
Casino gross gaming revenue (GGR) in Okada Manila fell 24.1% year-over-year in the first quarter, according to an April release from Tiger Resorts.
"Following strong 2023 results, we expect sales growth to slow in 2024 before rising from 2025," Fitch said of its parent Universal Entertainment
However, Fitch added: "We downgraded the outlook for integrated resort (IR) revenue in the Philippines, although we believe the outlook for IR remains positive, driven by healthy economic growth and continued recovery in the Philippines."
Universal Entertainment reported a 3.0% year-over-year drop in first-quarter net sales to 34.43 billion yen.
The parent company's operating profit fell 15.5% year-over-year to just over 4.02 billion yen. However, the parent's owner's net profit rose 17.1% year-over-year to 3.45 billion yen.
