MGM Resorts and MGM China: FAQs

Research evidence excerpt

MGM Resorts and MGM China: FAQs

Barclays | US gaming / Macau gaming

Client inquiries / focus

Key areas of focus include capital structure, financial flexibility, and the extent of cash flow

mobility. Investors have also been examining the applicability of covenant protections,

including change-of-control (CoC) and designated group (DG) provisions. In addition, some

Asian investors have noted technical and investor-base considerations that could influence

relative value across the MGM Resorts and MGM China bond curves.

FIGURE 1. Org Chart for MGM Resorts and MGM China

Source: Bloomberg, company data, Barclays Research

Top trade in US gaming

We reiterate our Overweight rating on Playtika Holdings (PLTK) unsecured 4.25% notes due

March 2029. The notes trade in the vicinity of 91.5/92.5 (YTW: 7.86%/7.42%). Playtika is a

developer and operator of casual-based and casino-based mobile games. Elevated marketing

efforts have been weighing on margins, and acquisition-related earn-out payments have

consumed free cash flow. With leadership scaling back marketing efforts, we expect margin

improvement and favorable comparisons. The notes are unsecured with porous covenants, and

the company is in the midst of a strategic review. However, with the term loan due in 21 months

and the notes due in 33 months, we anticipate that leadership will be focused on positioning for

a near-term global refinancing. With the notes currently trading at an 8-9pt discount, we believe

there is meaningful potential to outperform as leadership focuses on performance with a view

towards initiating discussions with investors.

Top trade in Macau gaming

We reiterate our Overweight rating on Studio City (STDCTY) secured 31s. Indicated at