Moody’s Investors Services has downgraded the Macau government’s credit rating from Aa2 to Aa3 and assigned it a negative outlook amid concerns the city’s gaming revenues will remain volatile in the foreseeable future.
In a press release, Moody’s said that despite recent efforts to diversify Macau’s economy, strategies were still centered “primarily June 2016 inside asian gaming 43 around broadening Macau’s gaming and tourism market, leaving growth volatile and susceptible to shifts in external demand. We expect the economy will continue to contract during 2016 and 2017, although the pace of decline may ease.
“The rating downgrade reflects Moody’s view that the sharp weakening in the economy, with growth remaining highly volatile, coupled with the limited policy response to the fall in gaming revenues, leave Macau’s credit profile weaker than those of Aa2 peers.”
Moody’s also downgraded Macau’s long-term foreign currency bond ceiling from Aaa to Aa2 and its long-term foreign currency deposit ceiling from Aa2 to Aa3.
In response to the news, The Monetary Authority of Macao released a statement of its own insisting Macau remained in a strong financial position.
“Over the long term, Macau’s economic resilience and creditworthiness will continue to be effectively supported by its fiscal strength, solid external financial position, credible policy framework, reliable linked exchange rate system, sound financial system and strong economic fundamentals,” it said.