Moody's assigns Gamma Bondco notes Caa1

Moody's Investors Service said it assigned a Caa1 instrument rating to the proposed €400 million of PIK toggle notes due 2026 to be issued by Gamma Bondco Sarl, a holding company of Lottomatica SpA.

Concurrently, Moody's downgraded Lottomatica's corporate family rating to B2 from B1 and its probability of default rating to B2-PD from B1-PD. Moody's also affirmed the B1 instrument ratings on the €340 million of senior secured notes, the €300 million of floating-rate notes and the €575 million of senior secured notes all due 2025, issued by Gamma Bidco SpA.

“The downgrade of Lottomatica's CFR to B2 reflects the unexpected and aggressive nature of the dividend recapitalization transaction which is indicative of a financial policy prioritizing short-term shareholder returns over containing credit risk. The transaction and its timing are demonstrating the group's shareholders tolerance for financial risk and increase in leverage,” Moody’s said in a press release.

The proceeds will be used for a €375 million dividend. The remaining proceeds will be used to fund fees, expenses and to pay the first interest coupon in cash.

The outlook for the three companies is stable.

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