Ratings agency Moody’s has confirmed the Macau Government’s foreign issuer rating at Aa3, which is the fourth-highest rating in Moody’s Long-term Corporate Obligation Rating, meaning the SAR is judged to be of high quality and subject to very low credit risk.
“The affirmation of the Aa3 ratings reflects Moody’s assessment that Macau’s large fiscal and external reserves will continue to provide the economy with buffers to absorb shocks,” Moody’s said in a statement.
On the other hand, the city’s reliance on a single industry – gaming – will continue to pose risks related to Macau’s high growth volatility, which is one of the highest among rated governments.
Macau’s Gross Domestic Product (GDP) took a 27 percent dip after edging up by 18 percent in 2021. In 2020, the first year of the COVID-19 pandemic, the economy plunged by 56 percent.
The ratings agency is sceptical regarding the impact of the SAR’s efforts to diversify its economy in the foreseeable future, “Moody’s does not expect Macau’s efforts to diversify growth away from the gaming industry to yield results that would materially reduce volatility in the near to medium-term.”
The region’s outlook remains stable, reflecting balanced risks to the city’s credit profile. On the one hand, the city’s economy “may benefit from more rapid progress toward economic diversification than what Moody’s currently expects,” the agency admits. On the other hand, Macau is set to “remain exposed to a number of potential shocks, particularly those related to economic, financial and policy developments on the mainland.”
