Galaxy Casino's rating falls amidst rising competition

Thursday, 27 March 2008

Standard & Poor's Ratings Services said it has cut its outlook on Galaxy Casino SA to stable from positive reflecting stronger-than-expected competitive pressure in the Macau gaming market, both in the mass and VIP segments, AFX News reported. S&P said competition among operators, which currently own a total of 29 casinos, will continue to increase significantly. Competition will be particularly intense in 2009, when more casinos are due to open – either before or after Galaxy's integrated casino and entertainment resort, Galaxy Cotai Mega Resort opens on Macau's Cotai strip. The ratings agency said it believes the company is responding appropriately to rising competition by upgrading the design of its resort and bringing forward its development plans, which has delayed the opening of the resort until at least May 2009 thus significantly increasing its development costs. “We believe a positive outlook is no longer appropriate for the rating, given the significance of Galaxy's work-in-progress, heightened competition, and rapidly changing market conditions,” S&P said according to AFX News. The ratings agency also affirmed Galaxy's long-term corporate credit rating and the issue rating on Galaxy's senior unsecured notes at 'B'.