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Schroder Investment Management gave a positive take on the Macau casino sector calling it one of the bright spots in Asian credit. Ng Peng Fong, head of Asia credit said that Macau casinos “are around 60% of gross revenues compared to pre-pandemic so they’re now cashflow positive”. He added that Macau gaming bonds are “still very well supported”. On the challenging aspects to the economy, he noted that manufacturing and exports would be under pressure due to slowing global demand. The Schroder ISF Asian Credit Opportunities fund is said to be holding corporate bonds of MGM China, Sands China and Wynn Macau. The fund is said to be further looking out for opportunities in Macau casino operators.
The outlook by Schroders follows S&P’s outlook revision on the sector last month citing a “robust recovery”. In 1Q 2023, gross gaming revenue (GGR) recovered to 67% of 1Q 2019 pre-pandemic levels. This was much higher than S&P’s expectations of 35-40%. They expect this to further accelerate to 60-70% of 2019 levels in 2H 2023. Also, the rating agency said that the rapid pace of recovery would help in casino operators’ EBITDA and cash flows witness a fast improvement.