EFTA01385349.pdf

January 2018 HY Corporate Credit HY Multi Sector.Media. Cable & Satellite Impact from Tragic events of 1011/1/. Based on commentaries from several management teams, we believe that the impact from the tragic mass shooting in the Strip could have a modest short-term impact and thus we don't expect it to hinder the prospects of the city. We note that MGM's management noted that bookings declined immediately after October 1 because the company suspended its outbound marketing programs. Management also noted that they saw a spike in non-group cancellations (more than double than what they normally see). However, they noted these cancellations progressively subsided by mid-October and the booking pace returned to normalized levels after the company resumed its marketing efforts. Of importance, Mandalay Bay was the exception, as the company felt it was appropriate to reinstate marketing programs at a slower pace. Macau .- GGR Growth to Continue in 2018 We expect Macau to end 2017 with higher GGR of $33.3 billion (+19.2% versus S27.9 billion). In our view, the primary drivers of the market expansion were: (1) the resurgence of the VIP segment, which was driven at least in part by the expansion of small-and-mid-sized junkets; (2) the improvement of the Chinese economy, which was largely driven by strength in the housing market (Tier-3 cities); and (3) the impact from new supply, which has driven incremental visitation. We believe these factors have contributed to make Macau a more appealing destination for both gamblers and leisure travelers. Looking into 2018, we anticipate GGR should increase to $37.0 billion (+11.0% versus $33.3 billion) owing to strength in both the mass market and the VIP segments. On a segmented basis, VIP revenues are expected to increase to $21.4 billion (+11.5% versus $15.6 billion). We believe growth in the segment will be supported by new VIP room openings from the Big 4 junkets. Turning to the mass market, we anticipate GGR to increase to $15.6 billion (+103% versus $14.1 billion). In our view, the increase in mass gaming revenue will be driven by incremental visitation, which will benefit from the opening of new supply. Exhibit 10' Macau Gross Gaming Revenue Forecast (S millions) Mtns Yrtyr VIP Yrlyr Tots Yr/yr 1015 83.397 .27.1% 84.715 -42.0% 58.112 -36.6% 2015 3.168 -30.4% 3,951 -42.1% 7,119 -37.4% 3015 3.177 -29.6% 3.628 -38.0% 6.805 -34.4% 4015 3.158 -140% 3.703 45.6% 6,862 -776% 2015 612.900 -26.0% $15897 -39.9% $28.987 -34.3% 1016 3,228 -5.0% 3,803 -19.3% 7,031 -13.3% 2016 3.131 -1.2% 3,329 -15.7% 6.459 23% 3016 3.299 3.9% 3.685 -1.2% 6284 1.2% 4016 3.390 7.3% 4,172 12.7% 7.562 10.7% 2016 $13,048 1.1% *14,800 -0.8% 827.936 -3.3% 1017 3.503 8.5% 4.442 16.8% 7.945 13.0% 2017 3,384 8.1% 4,488 342% 7,972 219% 3017 3.539 7.3% 4847 35.2% 8.386 21.8% 4017E 3.678 8.5% 5.423 30.0% 9,101 20.4% 2017E $14,104 8.1% 819,200 29.0% 533,304 19.2% 1018E 3.730 6.5% 5.419 22.0% 9.150 15.2% 2018E 3,740 10.5% 5,296 180% 9,035 14.8% 3018E 3,946 11.5% 5.210 7.5% 9.156 9.2% 4018E 4.138 12.5% 5.478 1.0% 9.615 5 6% 2018E 15,564 10.3% 21,402 11.5% 36,957 11.0% 2019E 16,798 8.0% 22,037 6.0% 39,486 02% $1,0a, "OM. Gem', knprenen dno• Ccercinvecn &era( COMPS", "%ig " OnAWA, 6 ." Page 74 Deutsche Bank Securities Inc. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0086633 CONFIDENTIAL SDNY_GM_00232817 EFTA01385349