Moody's ups Macao to Aa3

Moody's Investors Service said it upgraded Macao's foreign- and local-currency government issuer ratings to Aa3 from A1 in light of solid government finances and the position of the Chinese special administrative region as a large net creditor externally. Also upgraded was the region's foreign-currency bank deposit ceiling to Aa3 from A1.

The outlook is stable.

Macao's financial indicators are strong, Moody's said. The government has no debt and substantial financial assets, the agency said.

It appears that, unless there is a major shock emanating from China, Macao will continue to build up foreign assets, Moody's said. However, Moody's said, that because of its reliance on the Chinese economy, the ratings should not be very far apart.

The rating also is constrained by the lack of diversity in the sources of both government revenue and current account receipts, the agency said.

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