Gaming bonds rose after Macau officials unveiled the details of an overhaul of gambling laws that city officials initiated in September.
Macau's government said it would award 10-year licenses to a maximum of six casinos, with the possibility to extend the licenses for another three years under certain circumstances. The city's six existing licenses are due to expire June 26, and there had been uncertainty around whether current concessionaires would be allowed to renew. The latest language suggests the incumbents can hold their licenses until the new tender, which Macau said could be extended "for a short term" if the process is not completed before the current licenses expire.
Absent from the proposal was an increase in state oversight that was part of the draft gaming law Macau forwarded in September. New features were a requirement that local ownership in the casinos be raised to 15%, from the 10% previously, and the instigation of a 30% cap on public floats for license-holder subsidiaries. Rather than limiting market freedom, the latter directive is designed to "improve supervision for the healthy development of the gaming industry," according to Ku Mei Leng, chief of staff for the Office of the Secretary for Economy and Finance, who was one of three government officials speaking at today's press conference. The six casinos operating in Macau all do so via subsidiaries.
There was also no mention in the new regulations of an original proposal requiring concession-holding entities to seek approval before declaring dividends and to slash the number of gambling tables.
The bond-market reaction to today's news was far more muted than in stocks, where Sands China Ltd., Wynn Macau Ltd. and MGM China Holdings Ltd. all were up about 20% this afternoon. That is after falling earlier in the week after Macau tightened its COVID-19 testing requirements for entry to the city. From a broader perspective, the share price of the six Macau casino operators on average fell 41% last year, making 2021 their worst year since 2008.
Wynn bonds led the early gainers, with the Wynn Las Vegas LLC. 5.25% notes due 2027 advancing 1.25 points on decent volume, to 103, from Monday lows around 101. The entity's equally active 5.5% notes due January 2026 were up just over a point on the highs, at 103.875, for a yield of about 4.055%. Both issues established new highs in July with a 108 handle. The 5.125% senior notes due 2029 issued by Wynn Resorts Finance LLC were trading mixed at 102.5 and a full point higher on the week after dropping to par earlier on Monday.
Meanwhile, Sands China Ltd.’s highest coupon 5.4% senior unsecured notes due 2028 (BBB–/Baa2/BBB–) were changing hands around 1.625 points higher, at 106.625.
The Macau bill will today be sent to local legislature for approval and is expected to pass in its current form.
