Fitch affirms Macau’s ‘AA’ rating, cites potential economic diversification

Rating agency Fitch Ratings has affirmed Macau’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘AA’ with a stable outlook, believing recent changes to China’s credit profile do not significantly impact Macau.

In a report Friday, Fitch analysts said Macau’s economy highly depends on mainland China, but its strong public finances and fiscal prudence support the current rating.

Although Macau sees economic and gaming revenue shocks, Fitch said finances were managed well during difficult periods.

The rating agency said “sustained economic diversification away from the gaming industry” could lead to a positive rating action or upgrade for Macau. Currently, gaming dominates Macau’s economy.

Fitch has reported Macau’s rating remains underpinned by exceptionally strong public and external finances demonstrated even during past economic downturns.

However, the narrow economic base focused on gaming and high reliance on gaming tourists from mainland China present risks if policies change how gaming tourism operates.

In March, Fitch projected Macau’s 2024 economic growth at about 15% assuming casino gross gaming revenue recovered to 79.5% of pre-pandemic 2019 levels compared to 2023’s estimated 62.6% recovery. Staff Reporter