KUALA LUMPUR: The gaming sector continues to be hard-hit by the Covid-19 pandemic, but most operators can withstand a temporary cash burn, says Moody’s Investors Service.
In a sector in-depth report, Moody’s said falling international travel, property closures and the ongoing social distancing measures would keep the gaming sector’s prospects weak until at least 2021.
“We expect that the combined ebitda of gaming companies with exposure to Asia Pacific will fall around 70% in 2020 before gradually recovering in 2021,” vice-president/senior credit officer Jacintha Poh said.
She said despite the bleak outlook, most rated companies have sufficient liquidity to meet their cash needs and debt payments over the next 12 months.
Poh said companies’ leverage would remain elevated in 2021 compared with 2019 amid an increase in debt to boost liquidity.
She said since April, five companies have raised a total of around US$6.7 billion (RM28.6 bilion) to boost their liquidity.
“Large expansionary capital spending will also constrain the pace of leverage recovery, as most companies will likely continue their significant expansionary projects on the expectation of an eventual sector recovery,” she said.
She said some companies are expected to draw down project financing loans to complete ongoing developments, keeping debt levels elevated. – Bernama
