Macau casino bonds are plunging as a deepening crackdown on Chinese “flies and tigers” is increasingly scaring away high rollers, Bloomberg reported Monday.
Wynn Macau Ltd. notes due October 2021 climbed 86 basis points this month, hitting a record 5.73 percent yield on Sept. 25.
Melco Crown Entertainment Ltd. had its debt due 2021 rise to a historic high 5.56 percent yield last week.
The six biggest Hong Kong-listed Macau casino stocks have plummeted 32 percent on average this year, the report said.
Gross gaming revenue in Macau, the only place in China where casinos are legal, may fall this year for the first time since 2002, amid an anti-corruption crackdown in the mainland, slowing economic growth and protests by croupiers for higher wages.
Tour operators are offering private jets to fly China’s high-spending gamblers to Melbourne and Las Vegas so they can avoid increased scrutiny in Macau.
“There’s a critical mass of headwinds without even getting into the ’China is slowing’ dynamic,” said Kevin McSweeney, a Toronto-based fund manager at CI Investments Inc., which oversees US$90 billion of assets.
“Investors have found more reasons to sell than to buy right now.”
President Xi is targeting Communist Party cadres from top to bottom nationwide. He has warned that the 87 million-strong party is facing “severe dangers” from corruption.
Liu Tienan, the former deputy head of the National Development and Reform Commission, is the latest high-ranking official to face trial on bribery charges.
Macau’s gross gaming revenue will probably drop 1 percent this year compared with an earlier prediction for 5 percent growth, CLSA Ltd. analysts led by Aaron Fischer wrote in a Sept. 24 note.
They also cut the 2015 growth estimate to 5 percent from 10 percent compared with an average of 30 percent in the past 10 years, the report said.
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