Macau casino bonds slide as China cracks down on corruption

Bond prices for Macau’s casino operators have fallen sharply as the corruption crackdown on mainland China spooks investors and deters VIP gamblers.

According to Bloomberg, the decline has been evident across the board, with the yield on Wynn Macau’s notes due October 2021 up 93 basis points in September to touch a record 5.80 percent.

For Melco Crown Entertainment the yield rose to an all-time high of 5.61 percent.

Stocks have also taken a battering, with the six biggest Hong Kong-listed Macau casino stocks sliding 32 percent on average this year.

Some analysts are now forecasting gross gaming revenue in Macau, the only place in China where casinos are legal, will fall in 2014 marking the first time since data on the sector began in 2002. The decline is attributed to President Xi Jinping’s anti-graft campaign, slowing economic growth.

Forecasters expect GGR to drop one percent this year, in contrast to an earlier prediction for 5 percent growth, noted CLSA analysts.

 

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