A group of bondholders are challenging a debt buyback plan proposed by Electronic Arts Inc. (EA), despite recent signals from S&P Global Ratings that a high-grade rating for the company’s bonds may be forthcoming.
The dispute centers on approximately $750 million of EA’s 2051 bonds, which experienced a significant price drop on February 10, 2026, before stabilizing. These bonds include a provision stipulating that EA must repurchase them at 101% of their face value in the event of a change of control and a downgrade to “fallen angel” status by two or more credit rating agencies. A $20 billion debt load associated with a prospective take-private transaction, slated to close around June 30, 2026, is expected to trigger those downgrades.
Rather than offering to repurchase the bonds at the stipulated 101% price, EA is attempting to utilize a defeasance clause within the bond indenture. This clause would allow the company to sidestep the change-of-control payout by depositing sufficient cash or U.S. Treasury securities into an escrow account to cover all future principal and interest payments. The defeasance clause is designed to allow issuers to refinance debt or remove restrictive covenants.
The bondholders’ resistance comes after EA’s buyers launched a tender offer to buy back $1.5 billion of the company’s bonds and proposed amendments to the indenture. On February 11, 2026, the 2051 bonds were trading in an 80 context, after falling 15 points to 77 on February 10, yielding roughly 4.49%.
S&P Global Ratings has privately indicated to some investors that it may grant a high-grade rating to $1.5 billion of Electronic Arts bonds, a move that could potentially reduce the likelihood of a payout to bondholders. Electronic Arts Inc. Ratings were placed on CreditWatch by S&P Global on February 23, 2026.
