S&P Global Ratings, one of the three major international credit rating agencies, announced that it expects to downgrade Electronic Arts Inc.'s credit rating to "junk" level following completion of the video game manufacturer's latest acquisition deal, which is projected to add approximately $20 billion in new debt. The credit rating agency stated on Monday that it is considering downgrading the credit rating of Electronic Arts (EA.US), a leader in AAA blockbuster games and one of the world's largest gaming companies, with an expected "multi-notch downgrade." In its statement, the agency noted that Electronic Arts currently holds an S&P issuer credit rating of "BBB+", which is three levels above high yield (so-called "junk" rating).

Electronic Arts announced earlier on Monday that it has agreed to be sold to an investor consortium including Saudi Arabia's Public Investment Fund, Silver Lake Management, and Affinity Partners led by Jared Kushner, Donald Trump's son-in-law. Based on enterprise value, the transaction is expected to close mid-next year and values the video game manufacturer at $55 billion. In comparison, Electronic Arts' stock price and market capitalization have surged recently, with shares closing up 4.5% on Monday, bringing the market cap to approximately $50.5 billion, still below the privatization valuation level.

This represents one of the largest leveraged buyouts of its kind, including a $20 billion debt financing commitment provided by Wall Street financial giant JPMorgan Chase & Co. Media previously reported that most of the funding is expected to be in place upon completion of the acquisition through simultaneous issuance of high-yield bonds and leveraged loans in both U.S. and overseas markets.

The company currently holds an issuer credit rating of "Baa1" from another credit rating agency, Moody's Ratings, equivalent to Electronic Arts' current level at S&P. Meanwhile, Fitch Ratings has assigned the company a rating of "A-", slightly higher than both S&P and Moody's ratings.

**Electronic Arts in Recovery Phase Set for Privatization**

In terms of gaming IP portfolio, Electronic Arts, one of the world's largest gaming companies, possesses a super combination of "sports annuals + service-based long-term games + top-tier narrative RPGs" (EA SPORTS FC, Battlefield series, Madden, Apex, Sims, Star Wars, NFS, F1/WRC, etc.), with current fundamentals comprehensively in a steady recovery phase driven by sports and long-term services.

Founded in 1982, Electronic Arts has become one of the world's largest independent video game publishers through industry consolidation waves in recent years, serving as a heavyweight player in the "first tier" of AAA-level games. Two years ago, Electronic Arts' long-standing strongest competitor—Activision Blizzard, developer of the Call of Duty shooter game series—was acquired by U.S. tech giant Microsoft Corporation.

Electronic Arts' overall performance is closer to "steady with upward momentum, driven by sports + long-term services" recovery. The company's "live services/in-app purchases + annual sports games" combination (EA SPORTS FC, Madden, UFC, FC Mobile, etc.) contributes the main performance growth momentum. Apex Legends' operations have stabilized, combined with the sports line's year-round sustainability, showing moderate improvement in net bookings and profit margins. Individual blockbusters (such as the Battlefield series and new single-player titles) may bring rhythm fluctuations, but the "foundation" of annual sports games + service-based long-term games makes the financial curve smoother.

Privatization will enable Electronic Arts to escape disruptions from quarterly earnings reports and investor demands. The company's advantages in sports gaming provide it with the "predictable revenue nature" favored by private equity firms. According to market research firm Circana data, Electronic Arts' sports games (including Madden NFL) occupied four positions among the industry's top ten best-selling games last year.

Analysts also expect that Electronic Arts' upcoming new-generation Battlefield 6 will boost company performance. This highly anticipated new installment in the shooter game series is scheduled for release on October 10, with considerable early excitement—prior to news of this acquisition, the game's anticipation had already driven Electronic Arts' stock price up 15% this year.

Privatization will undoubtedly significantly increase operating leverage and lower ratings (to high yield), but if operations continue to improve steadily, cash flow can offset some of the pressure from rising financial expenses—this will place "product rhythm and long-term service operational capabilities" in a more central position.