Macau passes Moody's credit check

PUBLISHED : Friday, 28 June, 2013, 12:00am
UPDATED : Friday, 28 June, 2013, 4:58am

Moody's Investors Service maintained Macau's credit rating of Aa3 and a stable outlook for the gambling hub's foreign- and local-currency debt.

The rating agency cited the government's strong financials, low exposure to external shocks and risks as well as economic resilience.

Macau posted a 13.5 per cent increase in gaming revenue from a year earlier to HK$28.73 billion last month.

The city has enjoyed average real gross domestic product growth of 14 per cent over the past 10 years.

But revenue growth slumped to 14 per cent last year from 42 per cent in 2011 after the government introduced a cap on the number of gaming tables. The cap is set at 5,500 until the end of this year, with annual growth limited to 3 per cent for the next 10 years.

The government also limited the number of foreign workers businesses can bring to Macau despite a growing consensus that the limit has been breached.

Casino-hotel operator Macau Legend Development, a listing hopeful, is one firm that plans to expand. It said it had received a "comfort letter" from the Gaming Inspection and Coordination Bureau to confirm its application for 350 more tables.

Moody's expects Macau's GDP growth to fall to single digits in the coming years amid increased competition in the gaming sector and volatility on the mainland.

Taiwan has proposed a 13 per cent tax rate on gross gaming revenue and the Philippines has imposed a 25 per cent tax on mass-market gamblers. Macau's competitiveness could suffer as it has a tax of nearly 40 per cent on gross gambling stakes plus a 12 per cent corporate tax on gross gaming revenue.