Marina Bay Sands bets big
Marina Bay Sands is preparing to launch a mammoth debt financing of around S$12bn (US$8.99bn) in what will be the largest loan from Singapore and a test of liquidity and appetite among lenders in the Lion City.
DBS Bank, Maybank, OCBC Bank and United Overseas Bank are expected to lead the loan, terms for which are still being finalised. The deal has evolved into a much larger borrowing as costs for the expansion of the casino and resort have more than doubled under a revised plan.
“The size is no doubt huge for the loan market in Singapore, but can it get done? Of course, there is always a first time,” said a senior loan banker in Singapore, shrugging off doubts on the pool of liquidity available among lenders for the quantum of debt required.
Loan volumes from the city state are already at an all-time high at US$54.58bn from 89 deals in the first nine months of this year, according to LSEG LPC data.
In comparison, lending in most markets in Asia Pacific has suffered this year, leaving banks hungry for assets. This was evident in September when ByteDance, the parent of the TikTok short video app, lifted its three-year financing to US$10.8bn from an initial target of US$9.5bn after attracting 18 lenders, marking the largest offshore loan from China’s technology, media, and telecommunications industry.
“This year has not produced enough opportunities for lenders in Asia Pacific to take exposure to good quality assets. ByteDance’s experience shows that jumbo deals can attract lenders and cross the finish line comfortably,” said another banker at an Asian bank in Singapore.
Marina Bay Sands already boasts a broad lender base, having roped in 30 lenders in general syndication for an S$8bn loan that closed in August 2019. Twenty-three of those lenders were from outside Singapore. DBS, Maybank, OCBC and UOB were the mandated lead arrangers, bookrunners and global coordinators.
The new S$12bn loan will refinance the August 2019 borrowing and fund capital expenditure for the planned expansion of the integrated resort.
Ballooning budget
The expansion, called Marina Bay Sands IR2, will include a fourth hotel tower, a 15,000-seat arena, additional capacity for hosting meetings, incentive, conventions and exhibitions, and entertainment offerings including premium gaming areas, according to a presentation from parent Las Vegas Sands on October 23.
Marina Bay Sands IR2 was first announced in April 2019 at a projected budget of US$3.3bn, which has since more than doubled to US$8bn, according to the presentation. This includes approximately US$4.7bn for design and construction, US$2bn for land premiums, and US$1.3bn for pre-opening and finance costs. Las Vegas Sands expects to fund 25%–35% of the total costs with equity and the remainder through project financing.
The amortising loan will carry a seven-year door-to-door life with an average life of around six years. The company is contractually obligated to complete the expansion by July 2029, but according to its current estimate construction will be completed in June 2030 with an anticipated opening date in January 2031. Any extension of the completion date beyond July 2029 is subject to government approval, the company said in the presentation.
Marina Bay Sands IR2 is separate from a US$1.75bn reinvestment in the existing property, which is the largest reinvestment since it opened 14 years ago. This includes the completed refurbishment of Towers 1 and 2 of the hotel, as well as new dining offerings and luxury lifestyle amenities.
While the plans for Marina Bay Sands are mind-boggling, it has a strong track record that should appeal to lenders. Although its adjusted property Ebitda of US$406m in the third quarter of 2024 was 17.3% lower year on year, the tally in the 12 months ended September 30 was US$2.06bn.
“The new loan includes a refinancing, which means existing lenders will renew their exposure. The new-money portion for the expansion will also find support from banks just like the 2019 borrowing did and also given the performance of the existing property. It is an opportunity not to be missed,” said a third banker in Singapore.
At S$12bn, the latest loan for Marina Bay Sands eclipses a S$9.3bn bridge loan for Thai billionaire Charoen Sirivadhanabhakdi’s TCC Assets in 2013 that is currently the largest loan from Singapore, according to LSEG LPC data. That borrowing funded a US$7.2bn general offer to buy out other shareholders of Singapore-listed Fraser & Neave.