Moody’s lifts Activision Blizzard from junk

Moody’s Investors Service said it upgraded Activision Blizzard, Inc.’s senior unsecured notes rating to Baa3 from Ba2, senior secured credit facilities to Baa2 from Baa3 and withdrew its Ba1 corporate family rating and Ba1-PD probability of default rating.

The upgrade reflects Activision Blizzard’s leading position in the growing and fragmented gaming industry, strong diversification across multiple genres and gaming platforms and strong track record of developing profitable and sustainable franchises with international appeal, Moody’s said.

The upgrade occurs at the same time that the company announced an agreement to acquire King Digital Entertainment plc for nearly $5.9 billion, using cash-on-hand and debt financing.

The transaction is not expected to have a material effect on Activision Blizzard’s credit metrics as about 60% of the acquisition will be funded with cash, the agency said.

The company also is expected to reduce debt quickly over the next two years, Moody’s added.

The outlook is stable.

The ratings reflect the company’s leading position in the growing and fragmented gaming industry, strong diversification and strong track record of developing profitable and sustainable franchises with international appeal, Moody’s said.

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