Las Vegas Sands’ Chinese subsidiary refinances $3.5 billion in bank loans

The Chinese subsidiary of Las Vegas Sands Corp. refinanced its $3.5 billion in bank loans and could raise another $1 billion in an effort to strengthen the company's financial flexibility.

In a statement to the Hong Kong Stock Exchange, where Sands China is publicly traded, the new credit agreement is expected to "significantly reduce" the company's interest expense. Sands China, which covers the Las Vegas Sands' holdings in Macau, hopes to extend its debt maturities beyond 2016.

The company plans to retire its older loans covering The Venetian Macau and will use the funds for construction on two development sites on the region's Cotai Strip.

Meanwhile, ratings service Standard & Poor's raised its corporate credit rating for Las Vegas Sands, citing the company's recent financial performance and expansion prospects.

JP Morgan gaming analyst Joe Greff said the refinancing is a sign the Hong Kong investment community was reducing its concern about investigations by the Securities and Exchange Commission and Department of Justice. The agencies are looking at the company for possible violations of the U.S. Foreign Corrupt Practices Act, which were alleged in a wrongful termination lawsuit brought by the company's former Macau chief executive.

Greff said Las Vegas Sands has several positive business signs pointing in its direction, including solid returns from its hotel-casinos in Macau and Singapore and the potential "to generate relatively stronger Strip results compared to its peers given its convention focus and solid position in the Asian baccarat segment." In its upgrade of Las Vegas Sands' corporate credit rating from "BB" from "BB-," Standard & Poor's said the company would "maintain a cushion in credit measures sufficient to allow for substantial development spending over the next several years," despite more than $10 billion in debt.