{"id":237731,"date":"2022-10-14T16:50:52","date_gmt":"2022-10-14T21:50:52","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=237731"},"modified":"2022-10-14T16:58:46","modified_gmt":"2022-10-14T21:58:46","slug":"macau-recovery-will-take-multiple-years-says-fitch-ratings","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/macau-recovery-will-take-multiple-years-says-fitch-ratings\/","title":{"rendered":"Macau Recovery: Long Road Ahead with Plenty of Debt"},"content":{"rendered":"

The story of Macau\u2019s recovery from the coronavirus pandemic is ongoing and taking far longer than gaming companies and investors were hoping. It\u2019s also clear that road will be laden with debt.<\/p>\n

\"Macau
Tourists walk in front of Casino Lisboa in Macau. The casino hub’s recovery will take several years, says Fitch. (Image: New York Times<\/em>)<\/figcaption><\/figure>\n

Amid lingering COVID-19 protocols that are keeping visitors away from the casino hub and hammering gross gaming revenue (GGR), there is sliding. Analysts expect it will be years before it resembles pre-pandemic levels. In a recent report, Fitch Ratings forecast 2022 through 2024 Macau GGR coming in at 27%, 50%, and 70% of 2019 rates, respectively.<\/p>\n

Macau\u2019s COVID testing\/quarantine policies have changed frequently during the past few years. Gaming recovery could be delayed with the reinstatement of tighter restrictions with higher infection rates,\u201d<\/strong> noted the research firm. \u201cSlower China economic growth could also negatively affect the gaming recovery, including for the valuable premium mass and higher-end players.\u201d<\/strong><\/p><\/blockquote>\n

China\u2019s zero COVID policy is pressuring the balance sheets<\/a> of Macau concessionaires. Morgan Stanley estimates that in the third quarter, limited operating capacity caused gaming companies to burn $1.5 billion in cash, up from $1.4 billion in the prior quarter.<\/p>\n

Macau Capital Conundrum<\/h2>\n

With concessionaires taking on debt simply to stay afloat while waiting for a return to normal, Morgan Stanley estimates the combined debt burden of Macau operators is $24 billion, or a nearly fivefold increase from the start of the coronavirus crisis.<\/p>\n

As such, access to capital markets is increasingly difficult, particularly for Hong Kong-listed concessionaires.<\/strong><\/p>\n

\u201cCapital access for the operators\u2019 Hong Kong-listed subsidiaries, which are the primary debt issuers associated with Macau operations, is likely to remain limited until GGR recovers to levels closer to 2019 and the regulatory overhang from the gaming concessions subsides,\u201d add Fitch. \u201cRefinancing needs are modest until 2024 when some subsidiaries will start facing debt maturities, when concession renewal event risk will no longer be a concern.\u201d<\/p>\n

\n

Las Vegas Sands (NYSE:LVS) and Wynn Resorts (NASDAQ:WYNN) — two of the three US-based Macau operators — are providing capital to their China units. In July, Sands loaned Sands China $1 billion and the month prior, announced it is loaning its Wynn Macau arm<\/a> $500 million.<\/p>\n<\/div>\n

Fitch forecasts that more moves like those could occur \u201cshould negative cash flows endure.\u201d<\/p>\n

Renewal Risk<\/h2>\n

Macau\u2019s retendering process is currently ongoing, and while conventional wisdom holds that the government will approve licenses for the six existing concessionaires, the undertaking is not without risk. Not with the entry of Genting Malaysia<\/a> into the fray. Analysts and industry executives see that company\u2019s Macau proposal as legitimate and one to be taken seriously.<\/p>\n

Should an existing operator lose its Macau license, it\u2019d likely be subject to immediate credit downgrades, said Fitch. Then there\u2019s the specter of the capital concessionaires must set aside to comply with Macau\u2019s new gaming laws.<\/strong><\/p>\n

\u201cThe possibility of onerous capital commitments also remains a key unknown until the concession tender process is publicly outlined by the government, which could occur in the near term. We have grown less concerned over the risk of potentially weaker operating economics given incremental clarity on enacted changes to the existing gaming law published by the Macau government,\u201d concludes Fitch.<\/p>\n","protected":false},"excerpt":{"rendered":"

The story of Macau\u2019s recovery from the coronavirus pandemic is ongoing and taking far longer than gaming companies and investors were hoping. It\u2019s also clear that road will be laden with debt. Amid lingering COVID-19 protocols that are keeping visitors away from the casino hub and hammering gross gaming revenue (GGR), there is sliding. Analysts […]<\/p>\n","protected":false},"author":46,"featured_media":237733,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[69069,62,81881],"tags":[81913,81897,83280,51],"acf":[],"yoast_head":"\nMacau Recovery Will Take Multiple Years, Says Fitch Ratings<\/title>\n<meta name=\"description\" content=\"Macau gaming recovery is a multi-year endeavor and debt is rising.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/macau-recovery-will-take-multiple-years-says-fitch-ratings\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Macau Recovery Will Take Multiple Years, Says Fitch Ratings\" \/>\n<meta property=\"og:description\" content=\"Macau gaming recovery is a multi-year endeavor and debt is rising.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/macau-recovery-will-take-multiple-years-says-fitch-ratings\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2022-10-14T21:50:52+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-10-14T21:58:46+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/10\/CL.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2048\" \/>\n\t<meta property=\"og:image:height\" content=\"1365\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/macau-recovery-will-take-multiple-years-says-fitch-ratings\/\",\"url\":\"https:\/\/www.casino.org\/news\/macau-recovery-will-take-multiple-years-says-fitch-ratings\/\",\"name\":\"Macau Recovery Will Take Multiple Years, Says Fitch Ratings\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-recovery-will-take-multiple-years-says-fitch-ratings\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-recovery-will-take-multiple-years-says-fitch-ratings\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/10\/CL.jpg\",\"datePublished\":\"2022-10-14T21:50:52+00:00\",\"dateModified\":\"2022-10-14T21:58:46+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Macau gaming recovery is a multi-year endeavor and debt is rising.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-recovery-will-take-multiple-years-says-fitch-ratings\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/macau-recovery-will-take-multiple-years-says-fitch-ratings\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/macau-recovery-will-take-multiple-years-says-fitch-ratings\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/10\/CL.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/10\/CL.jpg\",\"width\":2048,\"height\":1365,\"caption\":\"Tourists walk in front of Casino Lisboa in Macau. 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