S&P lowers Novomatic to junk

S&P said it downgraded Novomatic to BB+/B from BBB-/A-3 and lowered the issue ratings on its outstanding senior unsecured notes to BB+ from BBB-.

The outlook is stable.

“The downgrade reflects our view that the effects of the German Gaming Ordinance, along with a tough competitive environment in markets such as Italy and Australia, could cause Novomatic's EBITDA margin to further decline in 2019,” S&P said in a news release.

“Our previous expectation for improved ratios in 2019 seems less feasible now, and we do not think the group's cash flow measures could improve to a level that we consider commensurate with a BBB- rating.”

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