Moody’s Investors Service has upgraded its debt rating on Lionsgate to Ba3 from B1 due to the expected strong performance of the next three “Hunger Games” movies.
The rating service also upgraded its probability of default rating to Ba3 from B1. The move, announced Thursday after the market closed, came a week after Standard and Poors issued a similar upgrade.
Moody’s said the upgrades reflected Lionsgate’s increased financial flexibility over the next three years and its belief that it has the capacity and willingness to sustain such flexibility in the longer term.
“We believe the company has highly visible and significant free cash flows of well over $150 million per year through fiscal 2016, driven by the high probability of success of the remaining three films in the ‘Hunger Games’ series, as well as significant contracted revenues (including those from foreign output deals and television licensing deals) which are reflected in its backlog of $1.1 billion at 3/31/13,” it said.
I'm not sure what Ba3 actually stands for, but another upgrade should help LGF for Friday's trading.