Moody's downgrades Codere

Moody's Investors Service said it downgraded Codere SA's corporate family rating to Caa3 from Caa2 and its probability-of-default rating to Caa3-PD from Caa2-PD.

Moody's also downgraded the ratings on Codere Finance (Luxembourg) SA's €760 million of 8¼% senior notes due 2015 and $300 million of 9¼% senior notes due 2019 to Ca from Caa3.

The outlook remains negative.

"We have downgraded Codere's CFR to Caa3 because we believe that the company's risk of default before the end of June is very high given that it has not yet refinanced its €60 million senior facility, which matures on 15 June and which is vital in enabling the company to continue meeting its obligations at the corporate level," Ivan Palacios, a Moody's vice president, said in a statement.

Codere's Caa3 rating reflects the company's weak liquidity, high risk of default in the near term and high adjusted leverage, which stood at around 5.4x as of December 2012, the agency said.

The rating also reflects the company's exposure to emerging market risks, as well as its position as one of the leading gaming operators in Latin America, Italy and Spain, and its diversification in terms of business lines, gaming assets and geographies, the agency noted.

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