Remember the petition by Singaporeans against the building of the IRs? Remember the many voices urging the govt not to go ahead and jump onto casino the bandwagon. Even before our casinos are built the casino business has gone into a long term slump. There are plans to build casinos in Phillipines, Thailand and more casinos in Macau.
Sands is now in financial distress as it is unable to borrow money for its expansion. Its revenue is falling and there is a real risk that it won't be able to service its debts if the economic slump worsens.
I remember many people talking about our govt move to "join the casino party" so late as being a wrong one. The decision was made at the height of the casino bubble similar to our govt decision to sling cash into silicon valley at the height of the dot.com bubble in March 2000.
0158 GMT [Dow Jones] Singapore banks at risk of credit losses from funding Marina Bay casino-resort as operator Las Vegas Sands under financial distress, says UOB KayHian. Notes U.S. gaming group''s US$8.8 million loss in 2Q08, with debt/equity ratio at 3.9X while interest cover at only 0.83X, share price down 88.3% year-to-date. All 3 Singapore banks among total of 19 lenders involved in S$5.4 billion credit facility for casino-resort, with all 3 acting as lead arrangers. "We understand they are still holding the bulk of term loans allocated. The only exception could be UOB as it participated through UOB Asia, its investment banking arm." Says UOB could have distributed portion of its term loans to some other foreign banks. Downgrades OCBC (O39.SG) to Hold from Buy, cuts target price to S$6.55 from S$9.80. OCBC off 4.9% at S$5.61, DBS (D05.SG) off 6.9% at S$10.80, UOB (U11.SG) off 4.8% at S$13.82. (FKH)