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

Silver Heritage sees second director depart as Richard Barker stands down

Silver Heritage sees second director depart as Richard Barker stands down Silver Heritage Group has lost another director with the company announcing that Richard Barker has resigned with immediate effect. In a filing to the Australian Securities Exchange, the company said that Barker had resigned to focus on other business interests, with a previous resolution pertainin... Wednesday, 23 May 2018 06:48

Queensland tourism official to fly to Macau, Las Vegas for operator talks

Queensland tourism official to fly to Macau, Las Vegas for operator talks Queensland Tourism officials will fly to Macau and Las Vegas from next week to meet with operators regarding potential integrated resort developments in the northern Australian state. According to a report by Australian television network Channel 9, a team led by Tourism Minister Kate Jones will si... Wednesday, 23 May 2018 06:44

Vietnam to slash tax incentives for casino developments in special economic zones

Vietnam to slash tax incentives for casino developments in special economic zones Vietnamese officials are contemplating cutting previously agreed tax incentives for casino operators in the country’s special economic zones (SEZs). The draft law for Vietnam’s SEZs is expected to be discussed during a session of the Standing Committee of the National Assembly following critici... Wednesday, 23 May 2018 06:23

Duterte fires two PAGCOR officials, threatens more

Duterte fires two PAGCOR officials, threatens more Philippines President Rodrigo Duterte has sacked two senior PAGCOR officials and promised to sack more for alleged abuse of power in the granting of gaming licenses. According to the Philippine Star, Duterte accused the officials of granting a license to a free port operator outside the scope of fr... Wednesday, 23 May 2018 05:46

Current Issue

Macau and Japan: Licensing looms large

Macau and Japan: Licensing looms large The next few years are set to be the most crucial period ever in the Asian gaming industry – one which will lay the ground rules for decades to come in the world’s largest gaming market and what’s set to become the world’s second largest. By Ben Blaschke and Andrew W Scott Macau and Japan ... Monday, 30 April 2018 12:39

Pachinko: Japan's Unlucky Loser

Pachinko: Japan's Unlucky Loser Japan’s preparations for integrated resorts are hitting pachinko harder than the actual casinos ever will. By Muhammad Cohen Japan won’t open its first integrated resort for years, if ever, but the IRs already have their first loser, the country’s unique and ubiquitous pachinko business. Pac... Monday, 30 April 2018 12:33

Responsible Gaming in Japan: Bill to be key to Japan’s Gaming Market

Responsible Gaming in Japan: Bill to be key to Japan’s Gaming Market Global Market Advisors’ Brendan D Bussman runs through the pros and cons of Japan’s problem gambling legislation. By Brendan D Bussmann As Japan continues to look at the development of integrated resorts (IR), many people engaged and following the market are focused on the IR Implementation Bi... Monday, 30 April 2018 12:28

Safety First

Safety First The International Association of Gaming Advisors (IAGA) will hold its 37th annual International Gaming Summit during G2E Asia from 14 to 16 May at Four Seasons Macao. Among the many insightful seminars and events that will comprise IAGA’s summit is a responsible gaming workshop to be held on Wedne... Monday, 30 April 2018 12:12