January 13, 2022
Fitch Ratings Inc insists that US-controlled casinos in Macau will not be treated any differently from casinos owned by Chinese entities in light of the recent gaming rights refreshments in the city. The company solidified its claim by adding that US casino subsidiaries are owned by public entities listed in Hong Kong, have invested a lot of money, and are massive employers. Not only that but they’ve also promoted the social goals of the government every chance they get.
There Are Several US-Controlled Casinos in Macau
Currently, the US-controlled companies in Macau are Wynn Macau Ltd, Sands China Ltd, and MGM China Holdings Ltd. These casinos are subsidiaries of Wynn Resorts Ltd, Las Vegas Sands Corp, and MGM Resorts International, respectively.
Fitch wanted to be known that in the case of MGM China Holdings Ltd, the co-chair is a local Chinese influential figure – Pansy Ho Chiu King.
Samuel Hu, Connor Parks, and Colin Mansfield, the analysts who submitted the Fitch report on Monday, said that all operators have been supportive of the policy goals and have ensured that they do not fire people left and right due to the pandemic. Moreover, they’ve paid billions of dollars in taxes.
Licenses Are Macau’s Biggest Issue At The Moment
The only small problem that Macau is facing at the moment is the licenses, which are set to expire this year. Up until this moment, licenses were valid for 20 years, but as the gambling industry is being reviewed, some believe that the license validity period can be cut in half.
Licenses are the reason why Fitch put the credit ratings of Macau operators on “negative watch. However, Fitch expects license holders to quickly liaise with the government to hash out a solution that would take them off the negative watch list. Fitch also hopes that regulators will take the necessary steps to ensure stability.
The pandemic is also not making things easy for operators. Ever since COVID-19 began emerging through China, the mainland has been more or less the only territory that has a quarantine-free arrangement with the special region.
In the recent period, the number of COVID-19 cases saw a small uptick, which is why the Macau government confirmed on Saturday that all ferry services between the special administrative region and Shenzhen have been ceased. However, both China and Macau are champions of keeping their overall COVID-19 tally incredibly low, partly because of strict lockdowns and closed-borders policy.
Fitch noted that the rating negative watch will also depend on how the recovery in visitor volume will materialize in Macau. Additionally, the report stated that some variables that can make an impact on balance sheets and cash flows include licensing fees, gaming tax rate, capital commitments, the ability to upstream cash, etc.