The ratings on Spain-headquartered gaming company Codere S.A. reflect our view of its highly leveraged financial risk profile (after consolidating its shareholders' payment-in-kind [PIK] loan) and substantial exposure to Latin America (particularly Argentina and Mexico), which Standard&Poor's Rating Services regards as generally subject to greater regulatory, foreign exchange, and labor relations risks than its European operations (although cyclical pressures have recently been more severe in Spain). These weaknesses are somewhat mitigated by the company's cash-generative characteristics, leading market positions, and limited maintenance capital expenditure (capex) requirements. Codere operates gaming machines principally in Argentine and Mexican bingo halls and in Spanish bars, with those three countries contributing some 90% of EBITDA (excluding corporate overhead) in the first nine months
