Fitch Ratings has downgraded the long-term foreign-currency issuer default rating of Hong Kong-listed casino operator SJM Holdings Ltd to ‘B+’ from ‘BB-’, while assigning it a “stable” outlook. The credit ratings agency cited weaker-than-expected deleveraging prospects and softer earnings recovery for the casino firm.
A ‘B+’ rating indicates “highly speculative” fundamental credit quality, according to the ratings agency. Fitch also lowered the senior unsecured rating and rating on outstanding notes issued by subsidiary SJM International Ltd to ‘B’ from ‘BB-’.
“The downgrade reflects Fitch’s view that SJM Holdings’ leverage trajectory is no longer consistent with its previous rating level,” the institution stated in a Friday memo.
Fitch said it now expects the casino firm’s leverage metrics over the next two years to remain above thresholds associated with the ‘BB-’ rating level, amid slower growth in terms of earnings before interest, taxation, depreciation, and amortisation (EBITDA).
That is “due to market share dilution from the closure of satellite casinos and continued lacklustre performance at Grand Lisboa Palace,” wrote analysts Samuel Hui, Rebecca Tang, and Tyran Kam.
SJM Holdings reported a first-quarter net loss of circa HKD62 million (US$7.9 million), versus a net profit of HKD31 million a year earlier. That was on net revenues that declined 22.8 percent year-on-year, to HKD5.36 billion.
First-quarter group-wide adjusted EBITDA were down 4.3 percent year-on-year, at HKD917 million.
The three months to March 31 marked the first quarter the company operated without satellite casinos in its portfolio.
Earlier this month, Moody’s Ratings downgraded the corporate family rating of SJM Holdings to ‘B1’, from ‘Ba3’. Moody’s changed the firm’s rating outlook to ‘stable’ from ‘negative’.
In Friday’s report, Fitch forecast SJM Holdings’ EBITDA leverage at 7.8 times in 2026 and 6.5 times in 2027, improving from more than 9 times in 2025, but still “significantly higher” than the agency’s downgrade threshold of 5.0 times.
The institution nonetheless expects the casino group to continue reducing debt over the medium term through improved operating performance and gradual free cash flow generation. Fitch projected adjusted EBITDA at HKD3.7 billion for 2026 and HKD4.2 billion for 2027, versus HKD3.0 billion in 2025.
According to the Fitch analysts, earnings improvement should be supported by higher margins following the termination of Macau’s low-margin satellite casino system and efforts to recapture gaming business through self-operated properties, including the recently acquired L’Arc Casino.
Additional cost savings could come from staff redeployment and natural attrition following the satellite restructuring, the institution added.
Nonetheless, the ratings agency noted that SJM Holdings’ market position had weakened. The operator’s market share fell to 9.6 percent in the first quarter of 2026, below Fitch’s previous assumption of 10.7 percent for the year, reflecting the impact of satellite casino closures.
Fitch also flagged continuing underperformance at the Grand Lisboa Palace complex (pictured), saying growth momentum had slowed. Non-rolling gaming volume growth at the Cotai property eased to 3 percent year-on-year in the fourth quarter of 2025 and declined 1 percent in the first quarter of 2026, after stronger increases earlier in 2025, the analysts noted.
In its assumptions, Fitch projected Macau casino gross gaming revenue growth of 5 percent in 2026 and 2 percent annually thereafter. It forecast SJM Holdings’ market share at between 9.7 percent and 9.8 percent during 2026 to 2028, with revenue expected to decline 17 percent in 2026 before returning to modest growth in subsequent years.
The ratings agency said the firm’s liquidity remained “adequate”, noting that the company had refinanced bonds due this year via a US$540-million senior notes issuance completed in January and additional syndicated loan facilities. As of end-2025, SJM Holdings had HKD2.0 billion in available cash, excluding cage cash, and HKD3.6 billion in undrawn revolving facilities.
