Moody's has assigned a Ba3 credit rating and a speculative grade liquidity rating of SGL-2 to the proposed $480 million senior secured term loan that Callaway Golf is set to use to finance its acquisition of Jack Wolfskin (see our previous issue). It has also assigned a corporate family rating of Ba3 and a Ba3-PD probability of default rating to the company itself, with a stable outlook. The positive factors cited by Moody's are Callaway's leading market position and strong brand equity in the golf sector, its modest financial leverage and high turnover. The negative factors are that Callaway is entering an apparel industry that has different competitive dynamics, plus integration risks and Callaway's lack of experience in operating with financial leverage.
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