Wynn Closes $900 Million of 6.875% Notes Due 2035 to Retire Wynn Las Vegas's 2027 Debt

Wynn Resorts has pushed a 2027 maturity at its Las Vegas business out to 2035, at the price of a coupon 1.625 percentage points higher than the notes it replaces. The deal closed on 22 September, according to the company's filing.

• Wynn Resorts Finance and Wynn Resorts Capital issued $900 million of 6.875% senior notes due 15 March 2035 on 22 September, Wynn Resorts said in a filing with the US Securities and Exchange Commission
• The proceeds, with cash on hand, will redeem in full the 5.250% senior notes due 2027 issued by Wynn Las Vegas and Wynn Las Vegas Capital Corp., and pay the costs of the deal
• The new notes are senior unsecured, guaranteed by the domestic subsidiaries that guarantee Wynn Resorts Finance's credit facilities, and rank alongside its 2029, 2031 and 2033 notes
• Holders can require Wynn to buy the notes back at 101% on a change of control triggering event, and the notes carry redemption requirements imposed by gaming regulators
• The refinancing closed on the day Caesars shareholders met to vote on Fertitta's $17.6 billion buyout, a deal built on assumed debt

A 2027 Maturity Moves to 2035

Wynn Resorts announced on 10 September that its indirect subsidiaries Wynn Resorts Finance, LLC and Wynn Resorts Capital Corp. were offering $900 million of senior notes due 2035 in a private placement to qualified institutional buyers, and priced them the same day at 6.875%. In a Form 8-K filed on 22 September, the company said the notes had been issued under an indenture dated that day, with U.S. Bank Trust Company as trustee. They mature on 15 March 2035 and pay interest semi-annually, from 15 March 2027.

The purpose is a single refinancing. Wynn Resorts Finance will contribute or lend the net proceeds, with cash on hand, to Wynn Las Vegas, LLC, which will redeem in full the 5.250% senior notes due 2027 that it issued with Wynn Las Vegas Capital Corp., and pay fees and expenses. The filing does not state the principal outstanding on the 2027 notes or the amount of cash Wynn is contributing.

The new notes are senior unsecured obligations. They are guaranteed by the domestic subsidiaries of Wynn Resorts Finance that guarantee its senior secured credit facilities, and rank equally with its existing 5.125% notes due 2029, 7.125% notes due 2031 and 6.250% notes due 2033, while sitting behind the secured credit facilities to the extent of their collateral. Wynn can redeem them before 15 September 2029 at par plus a make-whole amount, and at set redemption prices after that date. A change of control triggering event obliges it to offer to repurchase at 101%, and the notes are subject to disposition and redemption requirements under gaming laws, a standard feature of casino debt that lets regulators force out an unsuitable holder.

Wynn Is Paying More to Take Refinancing Risk Off the Table

The arithmetic is simple. Replacing a 5.25% coupon with a 6.875% one raises the annual interest cost on the refinanced debt by 1.625 percentage points, and on $900 million of new notes that is roughly $14.6 million a year more than the same principal would have cost at the old rate. What Wynn buys with it is time: the 2027 maturity at its Las Vegas business now sits in 2035, behind the 2029, 2031 and 2033 notes in its ladder. Clearing a maturity before it falls due is the conservative choice, even at a higher rate, because it removes the risk of having to refinance into a worse market.

The Price Reflects a Market Where Casino Credit Is Not Cheap

A 6.875% coupon on senior unsecured paper is a reminder that high-yield gaming debt is still priced well above the 5.25% at which the 2027 notes were issued. Caesars is heading the other way, into a buyout that assumes its existing debt and will test how much leverage Las Vegas cash flows can carry. Wynn's move is the opposite posture: extend, stay unsecured and keep the ladder orderly. For Nevada operators facing a long run of capital spending, the lesson is that refinancing early is safer than refinancing late.

Wynn has bought eight years on its Las Vegas debt for a higher coupon. It is a trade most of the sector would take, if the market offered it to them.