The ratings on Spanish gaming company Codere S.A. reflect Standard&Poor's Ratings Services' view of its highly leveraged financial risk profile, after the consolidation of its principal shareholder payment-in-kind (PIK) loan. The ratings also reflect Codere's substantial exposure to Latin America, particularly to Argentina and Mexico, which we regard as generally subject to greater regulatory, foreign exchange, and labor relations risks than for European operations. Still, we remain mindful of the recently more severe cyclical pressures in Spain. These weaknesses are somewhat mitigated by our view of the company's cash-generative characteristics, its decreasing focus on Spain (which represented only about 7% of Codere's EBITDA on June 30, 2011), its leading market positions, and limited maintenance capital expenditure (capex) requirements.
