No credit upgrades seen for Macau operators in 2018: S&P

The credit profile of Macau’s casinos operators is likely to improve in 2018, though upgrades are not likely to be on the cards due to the intrinsic volatility in the industry and expected dividend increases, according to a report from Standard & Poor’s.

"We anticipate continued gross gaming revenue growth in Macau, though at a tamer clip," said S&P Global Ratings credit analyst Sophie Lin. "However, despite stronger financial buffers and momentum on revenues, we do not expect credit upgrades over the next 12 months."

S&P’s credit profiles incorporate the high cash flow  volatility intrinsic to the industry, as well as likely increasing distributions to shareholders. Other overhangs include potential large capital outlays if Japan's planned gaming jurisdictions get approval, and uncertainty regarding the expiry of Macau gaming concessions in 2020 and 2022.   

The report, entitled “Will Macau’s Winning Streak Last,” sayd VIP GGR is likely to slow to under 15 percent from 27 percent last year, due to China’s renewed efforts to curb capital outflows.

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