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Fitch maintains Macau AA- rating

Fitch Ratings is expecting Macau’s GDP to grow 2.5 percent in 2017, supported by improving gaming revenues from new resort openings.

In a note on Monday, the ratings agency issued Macau a rating of ‘AA-’ with a Stable Outlook, “underpinned by the territory's credible policy framework and exceptionally strong public and external finances, which continue to strengthen despite three consecutive years of economic contraction.”

“The ratings are constrained by Macao's high GDP volatility, elevated concentration to the gaming sector and tourism from mainland China, as well as its susceptibility to changes in China's broader policy environment,” said the agency.

Looking at the economy, Fitch says Macau’s economy is showing signs of rebound, with real GDP expanding by 4.4 percent in 16Q3 and 7 percent in 16Q4.

Fitch says the VIP and mass-market customer segments recorded positive growth in 16Q4, increasing the likelihood of a recovery in 2017.

While changes to China's broader policy environment, “including changes to visa regulations or the legalization of gaming in other Chinese territories” pose a threat to the gaming hub, Fitch says it does not expect the latter to occur in the near term.

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