Crown’s credit rating is slashed
CROWN Resorts’ credit rating has been cut to just one level above “junk” status as an inquiry into the casino group continues to raise serious corporate governance concerns.
Ratings agency Moody’s Investors Service on Friday cut its rating on Crown from Baa2 to Baa3 and said it remained on review with a possibility of further downgrade.
On the Moody’s scale, Baa3 is still an investment-grade rating but just one notch above what is considered a non-investment grade rating — colloquially known as “junk”.
The move by Moody’s came as New South Wales’ casino inquiry heard Crown could not be trusted to hold the gaming licence for its new Sydney casino because it continually resisted warning signs money laundering was occurring at its Melbourne and Perth venues.
The NSW Independent Liquor and Gaming Authority is conducting the inquiry to assess Crown’s suitability to hold the licence for a casino at Sydney’s Barangaroo development.
Moody’s analyst Maadhavi Barner said the downgrade reflected the decision by the authority this week to delay the casino’s opening slated for next month, and the risk of regulatory action against Crown in Melbourne and Perth.
“The downgrade reflects our opinion that there is an increasing likelihood of material downside implications from the escalating regulatory investigations Crown is facing,” Ms Barner said.
Despite the escalation of regulatory risk, Moody’s said it still considered the loss of the Sydney licence as a result of the inquiry “unlikely”.
Another key factor influencing the credit risk was “a number of governance and compliance shortfalls” revealed during the inquiry, the agency said in a statement.
The inquiry on Wednesday heard the admission by Crown that evidence of money laundering had indeed been found in its bank accounts.
But it came long after banks closed various accounts over their concerns, of which chief executive Ken Barton was aware.
At the inquiry in July Mr Barton had been shown the accounts were “riddled” with suspicious transactions and only conceded it was concerning afterwards.
Counsel assisting Scott Aspinall asked why information received from the banks was not taken seriously and why Mr Barton had to be “led by the nose” to an “obvious” and “irresistible” conclusion.
“The concession that money laundering took place in those accounts was resisted by Crown month after month after month until the 18th of November,” Mr Aspinall said.