As reported by Mike Ozanian of SportsMoney, Creative Artists Agency (CAA) has downgraded its debt. During this pandemic crisis the company had its credit rating lowered by Standard & Poor’s (S&P) Global Ratings to 2.000 or “B” rating from “B+”.
Before the crisis, CAA was in the process of raising around $393 million with a goal of borrowing $1.15 billion over a seven-year loan. This would have allowed them to refinance ther debts of over $750 million.
CAA currently is one of the largest sports and entertainment agencies, with athletes like Chris Paul, Zion Williamson and most recently 2020 NFL Draft first-round pick, Joe Burrow on its expansive client roster.
CAA remains in a “stable” credit outlook after the change because of S&P’s belief that the company “will continue to have sufficient liquidity to service debt obligations”. The expectation is for CAA to generate a cash flow-to-debt ratio of at least 5% over the next 12 months.
With sports and events on hold this move was an expected one to deal with the financial impact of COVID-19.