S&P cuts Novomatic

S&P said it downgraded its ratings for Novomatic AG and its senior unsecured notes to BB from BB+. The notes’ recovery rating is 3, reflecting an expectation of about 65% recovery in default.

Following the pandemic’s second-wave, European governments instituted another round of closures to limit the contagion’s spread. “Novomatic and customers of its leased-out machines have again closed many of their gaming arcades. We currently assume that restrictions will continue into the first half of 2021 but be less severe and less frequent. This is because we anticipate that a vaccine or effective treatment will likely not become widely available before the middle of 2021, and the non-essential nature of gaming operations will continue to expose land-based gaming operators to anti-coronavirus measures until then,” S&P said in a press release.

The agency said it now forecasts Novomatic’s adjusted EBITDA deteriorating by 50%-55% in 2020 compared with €663 million in 2019 and 30%-35% lower in 2021.

The outlook is negative.

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