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Fitch describes likelihood of further improvement to Macau’s concessionaires ratings as “constrained”

February 22, 2024 Macau Industry Updates

The likelihood of further improvement in Macau’s concessionaires’ ratings was categorized as “constrained” by Fitch Ratings on Thursday, indicating that the deleveraging efforts of certain operators would need some time to implement.

In spite of this, the agency projected a 15% rise in Macau’s GDP in 2024 along with a significant debt reduction for the majority of concessionaires.

According to Fitch, Macau’s casino industry will become stronger in 2024 as a result of a consistent increase in incoming traffic, particularly during the most recent Chinese New Year holiday.

Moreover, Macau has been able to withstand the consequences of China’s economic downturn because to a discernible shift in Chinese consumers’ preferences toward service-oriented sectors like entertainment and domestic travel.

Fitch said that additional positive rating actions are unlikely in the near future, despite the fact that it recently upgraded the ratings of SJM Holdings and Las Vegas Sands. The organization also said that, even although increased tourist traffic and gaming revenue may aid in debt reduction for Fitch-rated casino operators, their high leverage policies would probably prevent further rating rises.

Fitch, the rating agency, said, “We do not see significant further upside potential in the issuers’ ratings in the near term, as reflected by their Stable Outlooks.” It highlighted SJM’s high leverage ratio, which is probably only going to drop below its rating thresholds in 2026. Furthermore, Macau’s casino revenue recovery may be hampered by future measures to curb capital outflow from the Chinese mainland.

Even yet, Fitch continues to see Macau’s economy favorably for the next year. In March 2023, the SAR was given a “AA” rating by Fitch, which was based on solid public and external finances, continuous economic growth, and improvements in the casino industry.

Original story by: IAG

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