{"id":299690,"date":"2023-11-20T03:00:00","date_gmt":"2023-11-20T09:00:00","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=299690"},"modified":"2023-11-20T10:27:30","modified_gmt":"2023-11-20T16:27:30","slug":"macau-casino-bonds-gain-traction-among-investors","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/macau-casino-bonds-gain-traction-among-investors\/","title":{"rendered":"Macau Casino Debt Lures Bond Investors"},"content":{"rendered":"

Amid a shift away from China\u2019s battered property market, bond investors in Asia and other parts of the world are increasingly flocking to debt issued by Macau casino operators.<\/p>\n

\"Macau
A sign for Wynn Macau. Bonds sold by Macau operators are attracting investors. (Image: Reuters<\/em>)<\/figcaption><\/figure>\n

The bulk of Macau gaming companies carry junk ratings, meaning market participants take on more credit risk with those bonds, but they are compensated with higher yields than what\u2019s typically found on investment-grade corporate debt. The six Macau concessionaires are<\/a> Galaxy Entertainment, Melco Resorts & Entertainment (NASDAQ: MLCO), MGM China, Sands China, SJM Holdings, and Wynn Macau. Rebounding gross gaming revenue (GGR) in the special administrative region (SAR) has paved the way for upside by debt issued by casino firms.<\/p>\n

Macau is on a brighter spot, as its recovery is on track,\u201d said Value Partners Group, a Hong Kong-based asset manager, in a recent report.<\/p><\/blockquote>\n

Investors\u2019 faith in Macau casino bonds is being rewarded. For example, Sands China and its parent, Las Vegas Sands (NYSE: LVS), were lifted to investment-grade<\/a> territory by Standard & Poor\u2019s (S&P) in July.<\/p>\n

Macau Casino Bonds May Be More Appealing than Stocks<\/h2>\n

The enthusiasm for bonds issued by Macau concessionaires comes at a time when their share prices are stuck in the mud. With the exception of MGM China, shares of the other Macau operators recently hit 2023 lows.<\/p>\n

\n

JPMorgan analysts recently argued that the treatment of Macau stocks is overly punitive and that the operators\u2019 combined market capitalization resides at levels seen in 2022 when the SAR was barely open for business. The bank added that several of the operators are generating enough free cash flow (FCF) to more than cover debt obligations<\/a> taken on to stay afloat at the onset of the COVID-19 pandemic.<\/p>\n<\/div>\n

The point about FCF is pivotal because that could enable the concessionaires to reduce leverage, thus potentially positioning the companies for credit ratings upgrades.<\/p>\n

There are other signs bonds sold by Macau casino operators could reward investors. As just one example, the outlook on Melco\u2019s credit rating was upgraded last week<\/a> by Moody\u2019s Investors Service to \u201cstable\u201d from \u201cnegative.\u201d<\/p>\n

Other Points in Favor of Macau Casino Bonds<\/h2>\n

Debt sold by Macau gaming companies could have other tailwinds. Those include the point that excluding Chinese real estate debt, default rates across Asia\u2019s high-yield bond markets are relatively low.<\/p>\n

Second, with some Chinese property firms now out of the bond market, supply has dwindled, likely prompting investors to revisit Macau concessionaires\u2019 commercial paper.<\/strong><\/p>\n

\u201cChinese real estate companies represented a significant share of Asia’s high-yield bond market, but some of them have defaulted since 2021, including China Evergrande Group and Country Garden Holdings,\u201d reports Taichiro Sunaga for Nikkei Asia<\/a><\/em>. \u201cIn addition, their new bond issuance has decreased sharply. Currently, high-yield bonds of Indian and Hong Kong companies are also traded in relatively large volumes. The next most popular bonds attracting investor money are Macao casino bonds.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Amid a shift away from China\u2019s battered property market, bond investors in Asia and other parts of the world are increasingly flocking to debt issued by Macau casino operators. The bulk of Macau gaming companies carry junk ratings, meaning market participants take on more credit risk with those bonds, but they are compensated with higher […]<\/p>\n","protected":false},"author":46,"featured_media":291011,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[69069,10],"tags":[81913,81903],"acf":[],"yoast_head":"\nMacau Casino Bonds Gain Traction Among Investors<\/title>\n<meta name=\"description\" content=\"Macau casino bond gaining favor among professional investors.\" \/>\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-casino-bonds-gain-traction-among-investors\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Macau Casino Bonds Gain Traction Among Investors\" \/>\n<meta property=\"og:description\" content=\"Macau casino bond gaining favor among professional investors.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/macau-casino-bonds-gain-traction-among-investors\/\" \/>\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=\"2023-11-20T09:00:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-11-20T16:27:30+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/09\/FKF36AOPZZIF3OJ2LXMHTS7ECY.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"800\" \/>\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-casino-bonds-gain-traction-among-investors\/\",\"url\":\"https:\/\/www.casino.org\/news\/macau-casino-bonds-gain-traction-among-investors\/\",\"name\":\"Macau Casino Bonds Gain Traction Among Investors\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-casino-bonds-gain-traction-among-investors\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-casino-bonds-gain-traction-among-investors\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/09\/FKF36AOPZZIF3OJ2LXMHTS7ECY.jpg\",\"datePublished\":\"2023-11-20T09:00:00+00:00\",\"dateModified\":\"2023-11-20T16:27:30+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Macau casino bond gaining favor among professional investors.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-casino-bonds-gain-traction-among-investors\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/macau-casino-bonds-gain-traction-among-investors\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/macau-casino-bonds-gain-traction-among-investors\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/09\/FKF36AOPZZIF3OJ2LXMHTS7ECY.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/09\/FKF36AOPZZIF3OJ2LXMHTS7ECY.jpg\",\"width\":1200,\"height\":800,\"caption\":\"A sign for Wynn Macau. 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