Scientific Game

Fitch Ratings upgrades Macau to AA

Wednesday, 14 February 2018 04:26
Share
Visit us

Ratings agency Fitch Ratings has upgraded Macau’s Long-Term Foreign-Currency Issuer Default Rating (IDR) from AA- to AA.

Reflecting on the past 12 months for the Asian gaming hub, Fitch said the upgrade reflects a number of key ratings drivers, including estimated GDP growth of 8.7% in 2017 following three consecutive years of decline.

“The improved growth performance can be attributed largely to a pick-up in gaming activity, though private consumption has also stabilized,” the agency said. “Territory-wide gaming revenues rose by 19% in 2017, after a 3.3% contraction in the year prior.

“Fitch forecasts real GDP growth of 5% in 2018, a view that incorporates a moderation in gaming revenue growth to around 10% and a continuation of ongoing infrastructure initiatives aimed at enhancing the territory’s connectivity and attractiveness as a tourist destination.”

Fitch also estimates that Macau’s fiscal surplus rose to 10% of GDP in 2017, up from 6% a year prior, due to a surge in gaming revenues and continued expenditure restraint. The forecast for 2018 is a surplus of 7.2%, “a view reflective of our more optimistic outlook for gaming revenues this year following a 36% year-on-year increase in January 2018.”

“Fiscal buffers have continued to rise,” Fitch continued.

“Macau is the only Fitch-rated sovereign globally without any outstanding government borrowings, whereas gross general government debt for the AA median grew to an estimated 42% of GDP in 2017. In addition, prudent expenditure management has permitted the accumulation of substantial fiscal buffers. Fitch estimates fiscal reserves were approximately 137% of GDP at end-2017, equivalent to 5.6x the planned 2018 budgetary expenditure.

“A Basic Law requirement that Macao maintain balanced budgets and avoid deficits also provides an important policy anchor to safeguard the territory’s medium-term fiscal sustainability.”

Fitch said it was notable that Macau had maintained fiscal reserves for the past 15 years, even during a decline in gaming revenues between 2014 and 2016. And its balance sheets remain among the strongest of Fitch-rated sovereigns globally.

“The Macau authorities have demonstrated a commitment to fiscal prudence through a period of gaming windfalls and a heavy revenue shock,” it explained. “As a result, the territory’s fiscal and external balance sheets have strengthened to levels that more than offset the significant risks associated with its narrow economic base and concentration on mainland Chinese gaming tourism.”

What's new

Cebu City to move forward with casino resort plan

Cebu City to move forward with casino resort plan A Cebu City government official told local media on Monday that a proposed Php18 billion (US$356 million) integrated resort would proceed with its upcoming ground-breaking ceremony this Saturday in defiance of President Rodrigo Duterte’s apparent ban on new casinos. The IR, to be built on Kawit I... Tuesday, 21 August 2018 06:08

Success Universe issues positive profit alert

Success Universe issues positive profit alert Macau casino investor Success Universe has issued a positive profit alert ahead of its 1H18 results announcement next week. The group said late Monday that it expects to record an unaudited consolidated profit for the six months to 30 June compared with a loss for the same period last year. The pro... Tuesday, 21 August 2018 05:49

Another key departure as Cai Lingli steps down from Imperial Pacific board

Another key departure as Cai Lingli steps down from Imperial Pacific board Imperial Pacific International (IPI) has lost its second key board member in the space of a week with Cai Lingli – a relative of majority owner Cui Li Jie – stepping down as a director of the company and chairperson of the executive committee. Her departure comes just seven days after Marco Te... Tuesday, 21 August 2018 05:23

Melco Resorts confirms Studio City IPO plans in motion

Melco Resorts confirms Studio City IPO plans in motion Melco Resorts & Entertainment has confirmed that it is continuing preparations to launch an Initial Public Offering of shares in Studio City International Holdings – the holding company for its Studio City integrated resort in Macau. Updating the company’s intentions almost exactly a year s... Tuesday, 21 August 2018 04:56

Current Issue

OZ VIP: A new dawn

OZ VIP: A new dawn It has taken just 12 months for Australia’s VIP turnover to rebound following the arrests of 19 Crown Resorts employees in China in October 2016, but the balance of power between Australian operators has shifted dramatically in the process. By Ben Blaschke   Just 12 months after the release of... Sunday, 29 July 2018 22:32

Waiting for Garapan

Waiting for Garapan Imperial Pacific says it will miss another deadline for completing its Saipan casino hotel, and there’s no consensus on a completion date. Meanwhile, VIP roll and trade receivable numbers soar. By Muhammad Cohen   Imperial Pacific International continues to excel at manythings. Its monopoly ca... Sunday, 29 July 2018 22:27

License to thrill: How casino re-tendering will shape Macau’s future

License to thrill: How casino re-tendering will shape Macau’s future Professor Glenn McCartney takes a look at the impending Macau casino re-tendering process and why the government’s criteria for issuing licenses will shape the city’s tourism future. By Professor Glenn McCartney   Macau’s casino concession and sub-concession contracts will all end in a few... Sunday, 29 July 2018 22:21

Making live online gaming a reality

Making live online gaming a reality Latency has long been the ultimate challenge for online gaming operators in their quest to provide a quality product, but a new open framework technology could prove to be a game-changer. By Jaheer Abbas | Senior Director, SEA & India at Limelight Networks   It’s hard to imagine that onlin... Sunday, 29 July 2018 22:09