Genting’s Limited Debt Headroom Amid Take-Private Bid of Genting Malaysia

RAM Ratings has reaffirmed the “AA1/Stable/P1” corporate credit ratings of Genting Berhad and its subsidiary Genting Malaysia Berhad (“GenM”), but flagged that the group’s debt cushion is becoming constrained as it moves ahead with its prospective takeover of the remaining GenM shares it does not yet own.

The concern from RAM centres on the fact that Genting’s proposed conditional voluntary takeover offer to buy GenM (where it already owns roughly 49.4 %) would require a large amount of additional borrowing. For example, market sources indicate that the acquisition could be funded by a roughly US $1.7 billion loan plus a medium-term bond issuance. RAM emphasises that while Genting has historically benefited from strong liquidity and diversified operations — which support the AA1 rating — the additional debt burden from the takeover will erode its margin for manoeuvre, meaning the debt headroom is “limited”. 

Importantly, this takeover move is not just any deal: Genting is offering around RM 2.35 per share for the remaining GenM shares — placing the total value of the transaction at roughly RM 6.7 billion. The rationale is to streamline its ownership structure and potentially delist GenM, giving Genting full control of its gaming and hospitality arm and facilitating its larger global ambitions (such as its US $5.5 billion casino project bid in New York) as referenced in recent analysis. 

However, by moving ahead with this debt-fuelled take-private, Genting is trading off near-term flexibility for strategic consolidation. RAM warns that should the company’s credit metrics deteriorate beyond thresholds (for example, debt to EBITDA rising too far), the current AA1 rating could face pressure. Indeed, credit watchers (e.g., Moody’s) have already placed Genting on review for downgrade given the scale of this financing and the weak baseline of its credit metrics.