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Bond Market News
Walt Disney Upgraded to A by S&P
December 3, 2024
Walt Disney was upgraded by a notch to A from A- by S&P. The upgrade comes after the company reached a leverage ratio of 2.2x at the end of fiscal 2024, which is better than its A- issuer rating threshold of 2.5x. S&P expects Disney’s leverage to decline further to 2.1x by fiscal 2025 and about 2x by fiscal 2026. Disney’s credit metrics have improved after the pandemic that saw theme park closures and heavy investments in streaming. Its operating performance benefits from its diversified business model and its ‘Experiences’ segment, which is the largest by cash flow. This is expected to see growth in revenue and operating income, even amidst potential macroeconomic downturns. Disney continues to remain the top legacy media company, with its iconic brands, global theme parks, and diverse media and entertainment businesses giving it a strong competitive edge over other legacy US media companies struggling with the transition to streaming.
Its dollar bonds traded with a positive bias with its 3.7% 2027s up at 98.7, yielding 4.3%.
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