“Downside risks” to Macau casino market recovery were “significant”, said Moody’s Investors Service Inc in a Thursday update. “A slower-than-expected recovery” in casino gross gaming revenue (GGR) was “a key risk, especially for companies that operate solely in Macau,” stated Moody’s.
Such scenario could arise “mainly because of continued travel restrictions and business closures amid the resurgence of the [Covid-19] pandemic,” added the ratings institution.
“GGR for the mass segment – the key contributor to gaming operators’ profit and cash flow – will likely remain weak at 30 percent of 2019 levels this year, before improving to 70 percent in 2023,” said Gloria Tsuen, a Moody’s vice president and senior credit officer. “A full recovery in the mass segment is likely only in 2024, which will lead to a significant improvement in operators’ credit metrics,” she added.
But the institution warned that, in a downside scenario, it assumed “mass GGR will return to only 60 percent of pre-pandemic levels in 2023 and 80 percent in 2024.”
The ratings house added that as a result, credit metrics of Macau-focused operators would in likelihood “remain very weak till 2024 and their ratings will come under heightened pressure”.
In 2019, the last full year of trading before the pandemic, Macau’s GGR was nearly MOP292.46 billion (US$36.17 billion, at current exchange rates), according to official data.
