Moody’s Downgrades CIE

Moody’s said it has lowered CIE’s rating to Ba3 from Ba2 on concerns about the Mexican entertainment industry’s future. “The gaming business, despite presenting one of the highest profit margins of CIE’s services portfolio, is vulnerable to an unpredictable regulatory and tax environment,” the agency said, adding that the commercial and entertainment divisions are deeply dependent on disposable income, which also faces downward pressure from the US and Mexican economic slowdown. While acknowledging the buyback was a positive step, Moody’s still finds too much of CIE’s cash generation to be dependent on its gaming business, which makes for an aggressive liquidity policy compared to peers.