The ratings on Latin American and Spanish gaming group Codere S.A. reflects its highly leveraged financial profile, negative earnings growth because of the deep recession in Spain, significant exposure to volatile Latin American economies, weaker liquidity and short-term debt maturities, regulatory risks, and the heavy indebtedness of controlling shareholders. These weaknesses are somewhat mitigated by the company's cash-generative characteristics, leading market positions, and limited maintenance capital expenditure requirements. Codere operates gaming machines in Argentine and Mexican bingo halls and in Spanish bars, with those three countries contributing some 86% of group EBITDA. The company's focus is on low-cost, high-volume gaming with limited seasonality and very limited gaming risk and hence relatively predictable cash flow generation. We view regulatory and currency
