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Moody’s to consider downgrading Macau’s Aa2 rating

Moody's Investors Service says it will be reviewing Macau’s Aa2 government issuer rating, with the view to lower it due to declining gaming revenues, according to a press release on Friday, Mar. 11.

The review, which is expected to be completed within three months will assess the extent of prolonged gaming revenue decline in the gambling hub, as well as the SAR’s broader economic strength, balance of payments, and the government’s financial position.

The review will also look into the implications of China’s rating which went from negative to stable, given the strong linkages with China.

“During the review period, Moody's will also compare expectations for growth, fiscal and external metrics over the rating horizon for Macao with those of similarly rated peers, many of which are also under review for downgrade,” said the rating agency.

Moody’s says it will likely lower the rating, by one notch  if the review concludes “that the government’s fiscal and external strengths will deteriorate relative to similarly rated peers, as the downturn progresses”.

“Our expectation of a prolonged decline in gaming revenues suggests that Macao's growth, fiscal and external metrics will likely deteriorate to levels below those consistent with its Aa2 rating,” said the agency.

Recently, U.S. broadcaster CNN dubbed Macau’s economy as “the worst performing in the world”, referencing the region’s one-fifth contraction in GDP last year, local media reports.

 However, the CNN report also noted that neither gaming executives nor local residents seemed to mind the slowdown. Average incomes were still rising and unemployment rate had not increased.

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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