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Bets Are Off

17 October 2016 by lberuti

It was made public this morning that 18 employees of CWNAU ( Crown Resorts Ltd ) are detained by the Chinese authorities in a high profile crackdown on casino operators. The government in Beijing is focusing again on foreign companies which have marketing operations in China and try to woo its citizens to gamble overseas. More than a third of CWNAU’s revenue at its Australian resorts comes from international visitors, predominantly mainland China, and the firm is building a high roller casino resort at Barangaroo on Sydney’s waterfront. The arrests triggered a steep fall of the shares of casino companies operating in the region. Even though analysts were assuming it should not have significant impact on the credit profile of CWLAU, when they saw its shares plunging almost 14%, credit investors marked the 5-year CDS 18bps wider at 210bps. Meanwhile, the broader credit market spent another dull session trading sideways. All credit indices remained in very tight ranges and the only noticeable fact was the outperformance of iTraxx Main which closed 0.5bps tighter at 73.5bps, while all other indices ended the day a tad wider.