Osaka's casino resort is in many ways a world first.Not only is it Japan's first integrated casino resort, but it has also secured a record ¥5500 billion (US$41 billion) loan.
many banks involved
The loan was considered by the government for nearly a year.However, several banks that were considering participating in this loan are now changing their decisions.
After lengthy negotiations, the district development plan for Osaka's first IR was finally approved in April.
Construction work is expected to be completed in winter 2029. MGM Resorts and Orix will be in charge of the resort construction together with Osaka Pref./City. As the CEO of MGM Resorts thinks, the opening is scheduled for around 2030.
Banks began to question their lending decisions after the COVID-19 pandemic forced many casinos to close and negatively impacted the industry as a whole.Behind this is the voice of local residents who oppose the opening of casinos, concerned about gambling addiction and deteriorating security.
Osaka-based banks MUFG Bank and Sumitomo Mitsui Banking Corporation (SMBC) will provide syndicated loans to casinos.Both companies are expected to provide between 2000 billion yen ($15 billion) and 3000 billion yen ($22 billion) in loans.However, the exact amount is still unknown as it depends on what other banks offer.
Resona Bank and SBI Shinsei Bank hope to participate in this big project as reliable banks in Japan.Development Bank of Japan and Sumitomo Mitsui Trust Bank, both of which are managed by the government, are also potential borrowers.In addition, local banks will also have opportunities to provide loans, and loans will be provided within the framework of the country without involving overseas banks.
Could Mizuho Bank Withdraw?
Meanwhile, Mizuho Bank, which was expected to participate, has not said anything officially yet, although its name has disappeared from the list of banks that have already announced their participation.
My companion doesn't seem very interested. MUFG and Sumitomo Mitsui Banking Corporation have accepted to repay the loan from IR profits, but Mizuho does not accept that and wants to rely on the company's creditworthiness, which is more of a corporate finance way of thinking.
If Mizuho decides not to get involved in financing, it will be a problem for other lenders, as they will have to invest 1000 billion yen ($7 million) more than previously planned.
Risk exists.Because the resort is located on Yumeshima, it can have serious environmental impacts such as soil contamination and liquefaction – it can happen to anyone.This is one of the key points of a loan agreement, and banks must decide whether the investment will be good for them in the future.
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