Fitch gives Macau ‘AA-’ rating, says outlook stable

Fitch Ratings has affirmed Macau’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at ‘AA-‘ with a Stable Outlook, according to a recent release from the rating agency.

Fitch says the rating is a result of “exceptionally strong public and external finances, a credible policy framework, and high income levels,” but are held back by “the territory’s volatile macroeconomic performance, high concentration in the gaming industry and mainland China, as well as some relatively weak structural indicators.”

Despite the 34 percent contraction in 2015 gaming revenue, Fitch forecasts a 2016 budget surplus of 2.9 percent of GDP, with the view that gaming revenues will fall only 5 percent. The 2016 budget which was announced on Jan. 4, 2016 targeted a 1 percent fiscal surplus and a much larger, 14 percent contraction in gaming revenue.

The agency forecasts real GDP to contract by a further 6.5 percent in 2016, due to the projected continuation of gaming revenue decline.