(CelebrityAccess) – CAA has raised $75 million in debt in an effort to ensure it has plenty of available liquidity as the entertainment industry attempts to stay afloat amid the ongoing COVID-19 pandemic.
As a result, S&P Global and Moody’s Investors Services downgraded CAA Holdings on Monday citing widespread cancelations and postponements of live events as well as the temporary loss of income streams for many of the company’s top clients.
“The live entertainment industry sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in CAA’s credit profile have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and CAA remains vulnerable to the outbreak continuing to spread,” Moody’s wrote on Monday.
Though Moody’s downgraded CAA to B3 from B2 level, while S&P Global dropped CAA to B from B plus, both agencies attached an outlook of stable to their ratings.
“The majority of CAA’s represented talent are being directly affected by these disruptions because they are not receiving compensation,” S&P Global wrote. “This, in turn, prevents CAA from collecting its agent commissions, which leads us to anticipate that its credit metrics will be materially weaker than we previously expected in fiscal year 2020. The outlook also reflects our view that volume of productions and live events, including sports and music, will gradually return to pre-pandemic levels toward the end of fiscal year 2020 into 2021, which will further improve the company’s credit measures over the next 12 months.”
According to the agencies, CAA has $1.15 billion in debt coming due in 2026 and a $125 million revolving credit facility due in 2024.