Fitch Ratings has downgraded the long-term foreign-currency issuer default rating of SJM Holdings to ‘B+’ from ‘BB-‘, citing weaker deleveraging prospects and slower earnings recovery for the Macau casino operator.
The ratings agency assigned a “stable” outlook to the company while also lowering the senior unsecured rating and outstanding notes issued by subsidiary SJM International to ‘B’ from ‘BB-‘.
Fitch said the downgrade reflects concerns that SJM Holdings’ leverage levels are no longer aligned with its previous rating category. According to the agency, the operator’s earnings recovery has lagged expectations following the closure of satellite casinos and continued weak performance at the Grand Lisboa Palace resort in Cotai.
Leverage expected to remain elevated
Fitch forecasts SJM Holdings’ earnings before interest, taxes, depreciation, and amortisation (EBITDA) leverage to reach 7.8 times in 2026 and 6.5 times in 2027. While this marks an improvement from more than nine times in 2025, the figures remain above Fitch’s downgrade threshold of five times for the previous ‘BB-‘ rating level.
The agency said slower earnings growth is likely to continue over the next two years. Analysts Samuel Hui, Rebecca Tang and Tyran Kam noted that market share dilution caused by the satellite casino closures had added pressure on the operator’s recovery efforts.
SJM Holdings reported a net loss of around HKD62 million ($7.91 million) for the first quarter of 2026, compared with a net profit of HKD31 million ($3.95 million) in the same period last year. Net revenue fell 22.8 per cent year-on-year to HKD5.36 billion ($684.5 million).
Group-wide adjusted EBITDA declined 4.3 per cent to HKD917 million ($117.1 million) during the quarter.
The January to March period was the first full quarter in which the company operated without satellite casinos in its portfolio.
Satellite casino closures hit market share
Fitch said SJM Holdings’ market position weakened further during the quarter. The company’s market share dropped to 9.6 per cent in the first quarter of 2026, below Fitch’s earlier forecast of 10.7 per cent for the full year.
The agency linked the decline directly to the shutdown of Macau’s satellite casino system, which previously contributed to the company’s gaming volumes.
Fitch expects SJM Holdings’ market share to remain between 9.7 per cent and 9.8 per cent from 2026 to 2028. It also projected the company’s revenue to decline 17 per cent in 2026 before returning to modest growth in later years.
The agency forecasts Macau’s gross gaming revenue to grow by five per cent in 2026 and by two per cent annually thereafter.
Grand Lisboa Palace remains under pressure
Fitch also highlighted ongoing weak performance at the Grand Lisboa Palace complex. The agency said growth momentum at the Cotai property had slowed sharply over recent quarters.
According to Fitch, non-rolling gaming volume growth at the resort increased by only three per cent year-on-year in the fourth quarter of 2025 before declining one per cent in the first quarter of 2026.
The ratings agency said the slower performance came after stronger gains earlier in 2025 and continued to weigh on SJM Holdings’ overall recovery.
Despite these challenges, Fitch expects the company to continue reducing debt over the medium term through improved operating performance and gradual free cash flow generation.
The agency forecast adjusted EBITDA of HKD3.7 billion ($471.9 million) for 2026 and HKD4.2 billion ($536.0 million) for 2027, compared with HKD3.0 billion ($382.8 million) in 2025.
Liquidity position remains stable
Fitch described SJM Holdings’ liquidity position as “adequate”.
The agency noted that the company refinanced bonds due this year through a HKD 4.23 billion ($540 million) senior notes issuance completed in January, along with additional syndicated loan facilities.
As of the end of 2025, SJM Holdings held HKD2.0 billion ($255.2 million) in available cash, excluding cage cash, and had access to HKD3.6 billion ($459.4 million) in undrawn revolving credit facilities.
Earlier this month, Moody’s Ratings also downgraded SJM Holdings’ corporate family rating to ‘B1’ from ‘Ba3’, while revising the outlook to “stable” from “negative”.
SJM chairperson purchases $3M in bonds
In early March, Daisy Ho, chairperson of SJM Holdings, purchased about $3 million worth of the company’s bonds through a series of transactions, according to disclosure filings submitted to the Hong Kong Stock Exchange.
The filings show that Ho acquired 6.5 per cent senior notes due in 2031 issued by SJM International Limited, an associated company of SJM Holdings. The purchases took place between 6 March and 10 March and were conducted through three separate transactions.
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