GGR optimism upgrades Macau’s rating to AA

Monday 12th of February 2018

Fitch Ratings on Tuesday announced it has upgraded Macau’s long-term foreign-currency issuer default rating (IDR) to AA from AA-.

“The Macao authorities have demonstrated a commitment to fiscal prudence through a period of gaming windfalls and a heavy revenue shock. 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,” said Fitch.

According to estimates from the ratings agency, Macau real GDP grew by 8.7 percent in 2017 following years of consecutive declines.

“The improved growth performance can be attributed largely to a pick-up in gaming activity, though private consumption has also stabilized. Territory-wide gaming revenues rose by 19 percent in 2017, after a 3.3 percent contraction in the year prior,” it said.

Fitch said it forecasts real GDP growth of 5 percent in 2018, which takes into account gaming revenue growth of 10 percent, and a continuation of ongoing infrastructure initiatives aimed at enhancing the territory's connectivity and attractiveness as a tourist destination.

Fitch also said it estimated that the city’s fiscal surplus rose to 10 percent of GDP in 2017, up from 6 percent a year prior, due to a surge in gaming revenues and continued expenditure restraint.

In 2018, Fitch said it forecasts a budget surplus of 7.2 percent, reflective of its optimism on gaming revenues this year.

Rating GGR