Las Vegas Sands’ Improving Credit Metrics (LVS)

Things really must be getting better in Las Vegas, even if the city has one of the worst housing markets in the country.  It may mostly be that Vegas casinos are winning from their Asian endeavors.  Las Vegas Sands Corp. (NYSE: LVS) has managed to score a debt rating upgrade from Standard & Poor’s.  The company is still not investment grade, but the comments and the rating seem to be heading that way if the trends continue.

S&P raised Las Vegas Sands’ corporate credit rating to ‘BB-‘ from ‘B’ and the new rating outlook is STABLE. The thesis for the report is that Las Vegas Sands should outperform S&P’s prior EBITDA targets for 2010 and should outperform for the next few years.  The new Marina Bay Sands property in Singapore was the key driving force behind the call.  S&P expects that EBITDA will be more than $600 million in 2010 and that it may hit $1.1 billion in 2011.

The area of caution is a reminder about having too much leverage.  S&P noted that the company’s debt burden is above $10 billion and its cap-ex plans are roughly $4.3 billion in 2010 and 2011.

The move to ‘BB-‘ is still short of the BBB- needed to secure an investment grade rating.  For now, S&P noted that further raises in the rating are limited due to a lack of clarity over the company’s future development projects.

JON C. OGG