MGM Resorts Seeks to Retire Debt with $750M Bond Sale

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In a striking financial move rising from the streets of the famed Las Vegas strip, MGM Resorts International made a bold declaration on Monday. The globally recognized casino pioneer, trading on the New York Stock Exchange under the label MGM, revealed plans to vend an impressive $750 million in corporate bonds. The proceeds from this venture are intended to serve as a financial cushion, cushioning the impact of the organization’s debt retirement slated for the ensuing year.

Operating Bellagio, an iconic establishment lining the Vegas strip, MGM Resorts International has embarked upon marketing $750 million in commercial paper set to mature by 2032. The capital obtained from this endeavor will be funneled into retiring MGM’s outstanding 6.75% senior notes due 2025. Should any surplus remain post retirement, it is projected to be allocated towards general corporate requirements or possibly deposited into interest-bearing accounts.


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The bonds currently on offer represent the general unsecured senior obligations of the company. They will be backed by an extensive array of the company’s wholly-owned domestic subsidiaries, which also guarantee the company’s other senior indebtedness. These notes will bear equal rights of payment alongside existing or future senior unsecured indebtedness of MGM and each of its guarantors.

By the conclusion of 2023, MGM’s financial position included $2.92 billion in the form of cash and cash equivalents and a long-term debt value amounting to $6.34 billion. This colossal setup had enabled MGM to generate a noteworthy $1.8 billion in free cash flow that year.

Interestingly, the assertions in the course of announcing the debt sale by MGM were devoid of any pointers toward the interest rate that may be affixed to the soon-to-be-issued bonds. However, in light of the issuer’s current junk credit rating, it would not be a leap of faith to presume that the coupon rate would surpass the yield drawn by investors from investment-grade corporates.

This conjecture, when paired with MGM’s escalating generation of free cash flow and their wealth of assets, could render the newly issued bonds appealing to the fixed-income market participants. Additionally, the debt sale actions undertaken by MGM potentially signifies a positive sentiment amongst bondholders. The market could interpret these actions as an indication that despite the prevalent high-interest rates, gaming enterprises, even those carrying sizable debt burdens, continue to have strong access to debt markets.

Often, new debt is levied by various companies across multiple industries as a tool to retire maturing bonds, a practice followed even in the world of casino games. This kind of strategic move is generally perceived in a positive manner as it expands the issuer’s maturity profile while potentially reducing leverage tactics.

Several stalwarts in the investment banking and securities services industry will be shouldering the role of joint book-running managers for the proposed offering. Deutsche Bank Securities Inc, BofA Securities, Inc, Barclays Capital Inc, among others will be sharing these responsibilities. Goldman Sachs & Co. LLC, PNC Capital Markets LLC, and Wells Fargo Securities, LLC will be seen supporting the process as co-managers.

The splendid entrance of MGM into the debt market not only signals a welcome atmosphere for gaming companies but also coincides with a time when US interest rates are at their peak in the last two decades. Despite the Federal Reserve holding back any revelations on when exactly it will trim borrowing costs, it hasn’t deterred gaming companies from issuing new commercial paper since the start of 2023.

This trend has promptly carried itself into 2024 too. Even before MGM made its groundbreaking announcement, rival casino company Caesars Entertainment, too, unloaded $1.5 billion in bonds due 2032 this January.

Allowing for the prospect that the Federal Reserve could possibly lower rates multiple times before the close of 2024, MGM’s newly issued bonds impart a potential upside in the face of imminent rate cuts.