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Cambodian gaming and leisure company NagaCorp was downgraded to B3 from B2 by Moody’s. The primary reason for the downgrade was due to lack of refinancing progress for its $472mn outstanding dollar bond maturing in July 2024. Furthermore, its lack of bank facilities and divestible non-core assets mean that NagaCorp suffers from a lack of liquidity sources. Even though NagaCorp has committed to reducing its discretionary spending over the next 18 months, its ability to repay the bond through free cash flow generation is highly dependent on the pace of earnings recovery which remains uncertain at present. As a result of low win rates and rising staff costs, NagaCorp generated just $59mn of EBITDA in Q1 2023, slightly lower than the $60.5mn it generated over the same period last year. Earlier this month, the company announced the extension of the completion date for its expansion project, Naga 3, by four years to September 2029.
NagaCorp’s 7.95% 2024s are currently trading at 94.8 cents on the dollar, yielding 13.4%.