Times have really changed for Las Vegas Sands
Deleveraging, especially in the U.S., has been the long-term strategy for Las Vegas Sands since early in 2009 when it nearly broke U.S. debt covenants. As Macau strengthens and Marina Bay Sands opens in Singapore, the company is using this time to reduce leverage in a struggling U.S. market.
Lower debt is great, but just as important for its U.S. operations is the relaxing of debt covenants in years to come. With Las Vegas in general still struggling, this was an important provision in any U.S. debt restructuring. But as you might expect, there was a cost to gain flexibility. Interest rates on remaining U.S. debt are going up 0.75% to 1% depending on the loan. I think this is a small price to pay for the freedom the company gets in exchange.
This deleveraging step doesn't bring Las Vegas Sands up to the financial health of Wynn Resorts
This is no doubt a positive for Las Vegas Sands' operations. The stock may still be overheated, but a pullback could be a buying opportunity, considering the effort to lower risk and the company's upside.
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