Moody's Downgrades Vivid Seats to Caa3, Citing Restructuring Risk

Moody's Ratings has downgraded the corporate family rating for Hoya Midco, LLC, the parent company of Vivid Seats (NASDAQ:SEAT), to Caa3 from Caa1. The ratings agency cited an increased likelihood of a balance sheet restructuring or a distressed exchange as the primary driver for the decision.

Rationale for the Downgrade

The downgrade reflects Vivid Seats' deteriorating financial position, characterized by high leverage and limited free cash flow. According to Moody's, the company has experienced sharp declines in gross order value compared to historical levels, leading to a significant drop in profitability.

Key factors highlighted by the ratings agency include:

• Moody’s-adjusted EBITDA fell to near-zero for the 12 months ending in June 2026, a stark contrast to approximately $100 million at the end of 2024.
• The agency projects that the company's adjusted leverage will remain well above 10x even with an expected stabilization in performance.
• In addition to the corporate family rating, Moody's also lowered the probability of default rating to Caa3-PD from Caa1-PD and cut the rating on its senior secured first lien term loan due 2029 to Caa3.

Financial Pressures and Liquidity

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Vivid Seats' financial obligations are straining its cash flow. The company reported $137 million in cash as of the second quarter of 2026, but faces significant annual expenses. Moody's projects the company will generate only around $5 million in free cash flow in 2026 after accounting for capitalized software development costs.

This is set against annual cash interest payments of $23 million and capital expenditures of approximately $15 million. In a recent move, Vivid Seats terminated its $100 million revolving credit facility in August 2026 and entered a new, smaller $75 million facility through its Vegas.com, LLC subsidiary, which was moved outside the company's restricted group in May 2026.

Outlook Remains Negative

Moody's maintained its negative outlook on Vivid Seats, signaling that a further downgrade is possible if conditions do not improve. The speculative grade liquidity rating remains unchanged at SGL-3.

The Caa3 rating on the senior secured term loan reflects Moody's expectation of an average family recovery rate of 50% in the event of a default.