Jumbo EA financing set to level up
Electronic Arts looks set to deliver a stunning result for the leveraged finance capital markets, with investors looking past a war in the Middle East and a software sector ravaged by AI risk to throw more than US$20bn of orders into the debt backing the largest LBO in history.
The demand for the US$18bn debt package has confounded doubts about lenders’ ability and willingness to absorb a deal of its size at a time when other trades have foundered and secondary markets have softened.
EA launched the US$4bn and €1.531bn seven-year term loan Bs on Monday, as part of the financing leg for the US$55bn take-private of the US video game maker by Saudi Arabia’s Public Investment Fund, Silver Lake and Jared Kushner’s Affinity Partners.
The loans are coming alongside an upsized US$3.25bn term loan A, US$6.5bn of other US dollar and euro secured debt, and US$2.5bn of other unsecured dollar debt. There is also a US$500m RCF due 2031. TLB commitments are due on March 23.
Prep work
A JP Morgan-led bank group worked intensely to prepare investors for the transaction, facing pressure to shift the risk of a market-defining underwrite. JP Morgan’s initial US$20bn underwrite was the biggest committed LBO financing on record.
Lenders, though, have responded positively to a transaction which Moody’s says will result in a 12-fold increase in EA's gross debt from US$1.5bn and increase pro forma leverage, as measured by total debt to Ebitda, to around eight times.
Moody's expects leverage to decrease to around five times by 2029, albeit not on a steady trajectory.
“This is a well-advertised transaction for a company that has household recognition,” said a Los Angeles-based investor. “And even though it will hike leverage, on a debt-to-enterprise value basis it doesn’t look too bad. Plus, there just hasn’t been enough new money paper in general.”
Bigger OID
The TLBs are guided at 350bp–375bp over SOFR/Euribor with a 0% floor and a 98.5 OID.
Some of the tension behind the pricing has relaxed, given a market backdrop that has softened over the course of 2026. The average trading level of loans to technology borrowers had fallen to 93.58 on March 18 from a year-high of 97.88 on January 12, according to LPC data, thanks to the combination of the war in Iran and worries about how software companies will cope with the rise of agentic AI.
“EA is wider than they would have come a month ago but taking into account everything that has happened in Iran and software, it’s a reasonable price,” said a leveraged finance banker.
“The leads have gone about it in the right way, showing the price a bit wider than perhaps they might have been hoping for at launch. But investors are reacting well to it, and it gives them the platform to tighten things.”
The accompanying secured US dollar bonds are whispered in the low-7s, the euro secured bonds are 100bp inside that level and the unsecured US dollar bonds are in the mid-8s, according to a source. The bond portion is expected to launch next week.
The dual-tranche TLA, which was launched at a size of US$3bn, is now split into a US$2.17bn three-year tranche and a US$1.08bn five-year portion, with interest margins of 250bp and 275bp, respectively. It attracted 15 banks in general syndication.
The corporate ratings are B1/BB–, with stable outlooks, and the secured ratings are Ba3/BB.
“Given the ratings, for a credit that big with that large-scale franchise, it will be liquid,” said a US investor.
“Is it going to trade up a lot? I don’t think so. But if you ... want to make a case to stay in software, this is the one to do. Most people will be buying and it has a fairly good credit story to tell.”
Big barriers
The pitch for EA is that the business is less about software and exposure to AI, and more about licensing contracts and data.
“With US$7.5bn in revenue expected in FY 2026, EA is the world's largest pure-play independent video game publisher and category leader in scaled sports titles holding exclusive licensing agreements with major leagues, teams, and players, providing a significant competitive advantage,” said Moody’s.
The source said EA enjoys huge barriers to entry, while the ratings reflect that leverage has not been pushed to the maximum and the equity cheque from the likes of PIF significantly outweighs the debt quantum.
The consortium will contribute US$36bn in new and rolled equity towards the LBO. The buyout is expected to close in June 2026, according to EA's September announcement.
“The equity cheque is enormous here – it is hard to ignore that,” said a buyside analyst. “It is probably underwhelming from a free cashflow pro forma perspective, but the rating agencies are giving them the benefit of the doubt that the cost savings will come through and that this will be something closer to a Double B rather than a Single B.”
The high profile of EA’s trade means bankers and investors alike are tracking the deal to see whether a successful syndication will boost optimism across the market.
“If this goes well, it’s going to be the reopening of the primary market,” said a CLO manager. “If it prices on Monday within guidance, that will give others a strong boost of confidence to go ahead and issue.”
JP Morgan is lead-left bookrunner and admin agent for the TLBs. It is a bookrunner with Bank of America, Barclays, BMO, Citi, Deutsche Bank, KKR, Morgan Stanley, RBC, BNP Paribas, HSBC, Jefferies, Mizuho, MUFG, Santander, UBS, Wells Fargo, Citizens, Scotia and Stifel.
Additional reporting by Madeline Fixler, Kristen Haunss, Evelynn Lin, Paul Kilby and Lukas Job