Research Update: U.K.-Based Gaming And Software Company Playtech Downgraded To 'BB-'; Outlook Negative

Despite the resilience demonstrated by its online gaming operations, we forecast that Playtech's credit metrics for 2020 will decline, given the temporary closure of retail franchise stores in Italy and the cancellation of global sporting events as a result of the COVID-19 pandemic. We forecast S&P Global Ratings-adjusted leverage of above 4.0x in 2020 (equivalent to about 3.2x, excluding our capitalized development cost [CDC] adjustment). However, Playtech will continue to generate modest free operating cash flow (FOCF), maintain adequate liquidity, and comply with its financial covenant through 2020. We are lowering our issuer credit rating on Playtech to 'BB-' from 'BB'. At the same time, we are lowering our issue ratings on the group's two outstanding bonds to 'BB-' from

...- Despite the resilience demonstrated by its online gaming operations, we forecast that Playtech's credit metrics for 2020 will decline, given the temporary closure of retail franchise stores in Italy and the cancellation of global sporting events as a result of the COVID-19 pandemic. - We forecast S&P Global Ratings-adjusted leverage of above 4.0x in 2020 (equivalent to about 3.2x, excluding our capitalized development cost [CDC] adjustment). However, Playtech will continue to generate modest free operating cash flow (FOCF), maintain adequate liquidity, and comply with its financial covenant through 2020. - We are lowering our issuer credit rating on Playtech to '##-' from '##'. At the same time, we are lowering our issue ratings on the group's two outstanding bonds to '##-' from '##'. The recovery rating is unchanged at '3' (rounded estimate of 65%). - The negative outlook incorporates the possibility of further rating downside if shutdowns or social distancing measures have a higher-than-anticipated...

Research Update