US operators to be treated on “level playing field” for Macau license re-tendering: Fitch

Despite concerns over the potential impact the US-China trade war could have on Sands China, MGM China and Wynn Macau when their gaming concessions expire in 2022, the three US-based concession holders can expect to be granted a “level playing field” according to ratings agency Fitch.

Issuing a report on macro headwinds facing Macau following a recent trip to the SAR by its gaming team, Fitch expressed confidence that the Macau government’s approach to the 2022 concession rebid will be pragmatic once new Chief Executive, Ho Iat Seng, takes office on 20 December 2019.

“The Chief Executive does have executive power to extend all concessions for five years, though we put a low probability on this occurring,” Fitch said in its report.

“We expect the US-based concession holders to be treated on level playing field with their Asian counterparts given the large amount of foreign investment, positive local sentiment on the concession holders (jobs, local investment), and adverse impact an effective nationalization of gaming could have on broader foreign investment in China and its special administrative regions (SARs).

“That said, the risk of a seventh concessionaire, incremental investment and changes to the tax rate (albeit less likely) still remain, but are manageable in our opinion.”

While Fitch said it doesn’t expect trade tensions to impact US operators in regard to future licensing, it did suggest further short-term pain for Macau’s VIP revenue, noting that, “Nobody was optimistic on the segment heading into 2020 and felt additional downside risk remains should US-China trade tensions escalate and further impact Chinese business and real estate owners.”

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