Moody's: European gaming sector's credit quality weakens as coronavirus severely disrupts operations

European gaming operators can weather a two-month shutdown, despite being among sectors hardest hit by coronavirus
Those with strong online operations and good liquidity will better cope with a prolonged period of disruption

Europe's gaming operators can cope with a two-month coronavirus-related shutdown but an extended lockdown could further pressure credit quality, Moody's Investors Service said today in a new report.

Moody's base case scenario is that the coronavirus outbreak will result in the closure of all retail and the vast majority of sports betting activities for two months. Only online gaming, virtual betting and to a much lower extent sports betting will continue to generate revenue.

"While all seven of the gaming companies we rate will cope with a two-month lockdown, those with strong online operations and good liquidity will be better able to cope with a prolonged period of disruption and a recession," said Florent Egonneau, Assistant Vice President – Analyst.

Liquidity is the immediate focus in the absence of access to capital markets. Germany's Tackle Group S.a r.l. (Tipico, B2 stable) has the strongest liquidity while Spanish operators Cirsa Enterprises, Sociedad Limitada (B2 review for downgrade) and Codere S.A. (Caa1 negative) have the weakest, with sufficient cash for only six to eight months for the former and four to five months for the latter under the current situation.

Gaming is one of the sectors worst affected by the coronavirus crisis, with Moody's already having downgraded two companies' ratings by one notch, and put three on review for downgrade.

REPORT:  http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1221776