Macau Gaming: The Game Is Still On

Research evidence excerpt

Macau Gaming: The Game Is Still On

Alvin Au AC Asia Pacific Credit Research

(852) 2800-8533 10 July 2026 J P M O R G A N

alvin.au@jpmorgan.com

Relative value and recommendations

Tight credit spreads with divergence between IG/HY

The Asia gaming sector has outperformed the market since reopening from the

pandemic in 2023, with cumulative total returns reaching +38% (vs JACI Index: +23%),

partly thanks to continual spread compression over this period. While the sector’s credit

spreads have tightened from SOT+469 in Jan 2023 to T+191 at present (vs historical

tight: T+153 in Oct 25), we still find selected investment value in the sector, as all-in

yields remain decent at over 5% thanks to elevated US Treasury yields.

We note that valuation trends have diverged between Asian IG and HY gaming since

2025. IG gaming has been compressing since late 2022 on the back of post-pandemic

recovery, and its spread pick-up vs JACI IG Corp has compressed to only 17bps at

present (vs historical average: 60bps). We believe that Macau IG names should trade

wider given the inherent cyclicality of discretionary consumption spending. Also, its IG

comps are mostly quasi-sovereigns or government-related entities, which enjoy some

explicit/implicit government support. Meanwhile, while HY gaming has been trading

inside JACI HY Corp since late 2022, the former only trades 121bps inside the latter at

present (vs post-2023 average: 200bps inside). For Macau HY, we believe that the sector

should trade much tighter than other Asian HY names, given they are located in a

creditor-friendly jurisdiction that is akin to the DM world, which should therefore

command some premium (e.g., tighter spreads).

Figure 1: Asia gaming - Spreads are tight, but all-in yields remain decent at over 5%

1400 (bp) (%) 20