Moody's placed Electronic Arts Inc.'s Baa2 senior unsecured debt ratings on review for an upgrade, citing the U.S. video game company's continuing modest debt leverage and excellent liquidity position.
The rating agency said the review will focus on EA's improving operating performance and management's commitment to sustaining strong credit metrics, in line with a higher rating. Moody's will also consider the company's plans for expected free cash flows and after-tax international cash balances.
"EA's free cash flow is very strong and is expected to generate at least $1.5 billion annually," Moody's wrote. The company's low debt-to-EBITDA leverage of 0.8x for the fiscal year ended March 31, significant cash liquidity and its position in the industry help its credit standing.
Moody's changed EA's ratings outlook to under review from stable.
S&P Global Ratings upgraded EA's corporate credit rating in March, saying the company's strong cash flow generation will keep leverage low amid continued growth.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.
