Credit-debt watcher Standard & Poor (S&P) Global Ratings is sounding alarm bells over the likelihood that Melco Crown Entertainment’s struggling Studio City will default on its loan.

Bloomberg reported that S&P lowered its outlook for Studio City Casino’s 2020 notes to negative, a clear indication of a dwindling confidence that the Macau’ project will be able to pay the US$1.41 billion loan, which was used to complete the construction of the hotel.

The value of the 10.625 percent notes co-issued by New Cotai LLC and New Cotai Capital Corp., units of U.S. hedge funds Silver Point Capital LP and Oaktree Capital Group LLC, had already slid by 42.5 percent even before the ratings agency issued the warning.

Silver Point Capital and Oaktree Capital own a 40 percent stake in Studio City through their funds, with Hong Kong-based Melco Crown Entertainment Ltd. holding the remaining 60 percent.