Fitch Affirms EA's Senior Notes Expected Ratings Following Covenant Defeasance Revisions

Published: 2026-05-12 06:51:15 ET EA

Published on 05/12/2026 at 06:51 am EDT

Fitch Ratings has affirmed the expected ratings on the following Electronic Arts Inc. (EA) notes after revisions to draft documents regarding the planned covenant defeasance of notes issued under the Base Indenture, dated Feb. 24, 2016, and the Second Supplemental Indenture, dated Feb. 11, 2021.

1.850% Senior Notes due 2031 at 'AA+(EXP)sf'/Outlook Stable (up to $750 million);

2.950% Senior Notes due 2051 at 'AA+(EXP)sf'/Outlook Stable (up to $750 million).

The rating affirmation reflects Fitch's analysis of revised drafts of the Defeasance Trust Agreement and related legal opinions. The ratings continue to reflect the expected shift in credit risk arising from EA to U.S. Government Obligations, if and when, the notes are defeased pursuant to Section 7.4 of the Base Indenture.

RATING ACTIONS

Entity / Debt

Rating

Prior

Electronic Arts Inc. Defeased Note

1.850% SENIOR NOTES DUE 2031

AA+(EXP)sf

Affirmed

AA+(EXP)sf

2.950% SENIOR NOTES DUE 2051

AA+(EXP)sf

Affirmed

AA+(EXP)sf

Page

of 1

VIEW ADDITIONAL RATING DETAILS

Transaction Summary

EA intends to defease each series of notes in accordance with Section 7.4 of the Base Indenture by instructing the Trustee to deposit funds into a trust account (the Defeasance Trust) to purchase U.S. Government Obligations in amounts sufficient, for each series, to cover all scheduled interest and principal payments on each payment date through the notes' original stated maturity. These U.S. Government Obligations will then be held in the Defeasance Trust.

The Defeasance Trust Agreement will constitute an irrevocable, first-priority security interest in and lien on, pledge, assignment and transfer of assets to the Indenture Trustee for its own benefit and the benefit of the defeased noteholders. The assigned assets are expected to be held outside EA's bankruptcy estate and may not be subject to compelled liquidation. Accordingly, in the event of EA's bankruptcy, although the notes automatically accelerate, the trust will continue making all scheduled interest and principal payments from the cash flows of matched U.S. Government Obligations.

Fitch's expected rating addresses the structural and legal protections of the draft Trust Agreement, which creates a structured payment mechanism allowing the timely payment of interest and principal on each originally scheduled payment date through stated maturity in 2031 and 2051, respectively. These structural protections shift the credit risk from EA's IDR to the credit quality of the U.S. Government Obligations (AA+/Stable) for the repayment of interest and principal on the stated note payment dates.

KEY RATING DRIVERS

Credit Risk Shifts to the U.S. Government: Under the covenant defeasance, EA will deposit money into the Defeasance Trust to acquire a portfolio of U.S. government securities, which will serve as the primary source of payments to noteholders through maturity. While the original indentures remain in effect and are not discharged, EA is released from compliance with certain covenants thereunder. As a result, Fitch's expected rating of the defeased notes reflects the credit quality of the defeasance collateral rather than EA's corporate creditworthiness.

Assets Are Isolated from EA's Bankruptcy Estate: The Defeasance Trust Agreement constitutes an irrevocable, unconditional, absolute assignment of U.S. Government Obligations to the Indenture Trustee for the exclusive benefit of the defeased noteholders. Fitch has reviewed legal opinions confirming that (i) the Defeasance Trust Agreement is valid, binding, and enforceable against EA, (ii) in the event of an EA federal bankruptcy filing, the money and/or securities transferred by EA into the trust would not be property of EA's bankruptcy estate under Section 541(a)(1) of the Bankruptcy Code and would not be subject to turnover under Section 542 of the Bankruptcy Code, and (iii) in the event of an EA bankruptcy filing, the deposit of money and/or securities would not be subject to avoidance under Section 547 of the Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law. As EA is solvent and is expected to be solvent on the day of transfer of money and/or securities, Fitch does not believe preference exposure presents a material risk.

Transaction Structure Supports Rating: The notes' indenture retains bankruptcy events of default, and an EA bankruptcy would automatically accelerate the notes. Fitch assessed this risk under its Global Structured Finance Rating Criteria and Single- and Multi-Name Credit-Linked Notes Rating Criteria. If the notes accelerate, no Holder or group of Holders may require dissolution, liquidation or termination of the Defeasance Trust or its investments. Fitch's rating addresses the trust's ability to make scheduled payments of interest and principal through original stated maturity. It does not address the accelerated par amount as an immediately payable obligation.

Matched Maturities and Predictable Cash Flows: Each note series (2031 and 2051) is backed by separately irrevocably assigned U.S. government obligations with payment dates and maturities aligned with stated interest and principal payments. Fitch has confirmed the securities intended to be irrevocably assigned to the Defeasance Trust are sufficient to cover all scheduled payments without requiring the sale of any pledged assets, mitigating exposure to market risk.

Counterparty risk: U.S. Bank Trust Company, National Association will act as indenture trustee. Fitch has reviewed counterparty exposure under its Structured Finance and Covered Bonds Counterparty Rating Criteria, and the trust includes trustee replacement provisions if the trustee defaults or becomes insolvent.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

A downgrade of the United States' sovereign rating would result in a corresponding downgrade of the notes. The rating can also be downgraded if there is a payment default by the Defeasance Trust on any scheduled payment date.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

An upgrade of the United States' sovereign rating would result in a corresponding upgrade of the notes.

USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10

Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.

DATA ADEQUACY

This rating action reflects draft documents received on March 23, 2026 regarding the Defeasance Trust Agreement and April 9, 2026 regarding the legal opinions.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS

The notes' rating is linked to United States of America's Long-Term IDR, based on it being the obligor of the securities defeasing the notes. A change to the Long-Term IDR would automatically result in a change in the related notes' rating.

REPRESENTATIONS, WARRANTIES AND ENFORCEMENT MECHANISMS

A description of the transaction's representations, warranties and enforcement mechanisms (RW&Es) that are disclosed in the offering document and which relate to the underlying asset pool was not prepared for this transaction. Offering Documents for this market sector typically do not include RW&Es that are available to investors and that relate to the asset pool underlying the trust. Therefore, Fitch credit reports for this market sector will not typically include descriptions of RW&Es. For further information, please see Fitch's Special Report titled 'Representations, Warranties and Enforcement Mechanisms in Global Structured Finance Transactions'.

Additional information is available on www.fitchratings.com

PARTICIPATION STATUS

The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer's available public disclosure.

APPLICABLE CRITERIA

Structured Finance and Covered Bonds Counterparty Rating Criteria (pub. 29 Nov 2023)

Structured Finance and Covered Bonds Country Risk Rating Criteria (pub. 17 Jun 2025)

Global Structured Finance Rating Criteria (pub. 05 Dec 2025) (including rating assumption sensitivity)

Single- and Multi-Name Credit-Linked Notes Rating Criteria (pub. 05 Mar 2026) (including rating assumption sensitivity)

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