S&P drops Cirsa view to negative

Standard & Poor's said it revised its outlook on Cirsa Business Corp. SA to negative from stable, reflecting the group's unexpectedly weak performance in the second quarter.

At the same time, S&P said it affirmed its BB- long-term corporate credit rating on Cirsa, in addition to its B+ senior unsecured debt rating on related entity Cirsa Finance Luxembourg SA and its B senior unsecured debt rating on Cirsa Capital Luxembourg SA.

S&P noted the outlook revision reflects Cirsa's below-par performance in the second quarter, which was mainly due to weakness in the Spanish gaming market and start-up losses in the group's new casino ventures in Latin America, in addition to ongoing EBITDA losses in its Italian slot business.

The ratings on Cirsa continue to reflect the company's highly leveraged financial profile, S&P said it expectation of limited free cash flow generation in the next 12 months as the group continues to invest in its business and the high percentage of group profit generated from Argentine operations, which S&P said it regards as inherently more unpredictable than Cirsa's Spanish operations.

These factors are partially mitigated, however, by the group's leading position in the Spanish gaming market, regulatory barriers to entry and good translation of profit into cash, the agency added.

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