Debt owed to junkets may be close to $13b

The amount of debt owed to Macau’s junket operators may now be as much as HK100 billion ($12.9 billion), Reuters reported, citing an unnamed Hong Kong-based analyst.

As China’s economy has slowed, the junkets are facing an increasing problem recouping money owed, with some waiting as long as one year for gamblers to repay loans, the report said.

Heng Sheng, one of the largest junket operators, in October told investors that 30 percent of the outstanding debt owed to its agents was more than a year old, according to notes taken by a participant at a conference that was closed to the media, the report said.

Gross gambling revenue in Macau has tumbled every month since June, with the VIP business leading the decline. A slowdown in China’s economy, and a crackdown on corruption on the mainland have been in part blamed for the decline, though problems due to a lack of liquidity in the junket system may also be having an effect.

Philip Tulk, an analyst at Standard Chartered, said last week that the junket system is “near broken,” and until confidence is restored he doesn’t see the VIP business as likely to snap back.

 

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