Macau strong recovery growth lets Moody’s retain credit rating

Macau over the last few years have not been so good in terms of financial growth for operators, but slowly and steadily it picked up and this former Portuguese enclave continues to post strong recovery growth. Because of this stable growth international credit-debt watcher Moody’s Investor Service has retained its credit rating for Macau.

Moody affirmed its Aa3 rating for Macau upgrading its outlook from negative to stable which is a good thing for Macau gambling industry. ‘Aa’ rating denotes high investment grade and are subject to very low credit risk. Macau’s ongoing progress on diversification and preservation of fiscal and external buffers is noted by Moody as signs of policy effectiveness that support institutional strength.

Moody’s said in a note on Wednesday, “Macau’s economy is returning to growth following the sharp recession of 2014-2016. Gross gaming revenues [GGR] have been increasing on an annual basis since August 2016, boosted by the opening of two new casinos late last year and a recovery in tourism from China,” “With the economy recovering, we expect Macau to build additional buffers in coming years.”

Macau listed a 13.8 percent expansion in GGR the first four months of 2017 as compared to last year with a MOP83.62 billion (US$10.43 billion).  As per investment analysts Macau’s GGR for May 2017 will jump between 14 to 20 percent from the prior year period. In addition to this Macau’s wide range of VIP gaming to mass market gaming is something which will support its profitability.

The agency even said that “Rising incomes in China and Macau’s proximity to the mainland will continue to support demand for Macau’s well-established gaming and tourism market, even in the face of growing competition from other parts of Asia,”  “We expect Macau’s economic recovery to endure over the next two to three years, supported by the ongoing diversification towards non-gaming activities.”