Moody’s turns Catalent view to stable

Moody's Investors Service said it revised the outlook for Catalent Pharma Solutions, Inc. to stable from ratings under review and confirmed its ratings, including its B1 corporate family rating and its B1-PD probability of default rating. Moody's also confirmed the Ba2 senior secured rating and the B3 senior unsecured rating. Concurrently, Moody's revised the speculative grade liquidity SGL-2 from SGL-4.

These actions conclude the review started on April 17 after Catalent reported a material reduction in earnings in the current fiscal year citing productivity issues at several facilities, higher operating costs, and weaker consumer demand, the agency said.

The stable outlook mirrors an expectation that leverage will decline over the upcoming 12 to 18 months and that adjusted debt/EBITDA will near 5.5x, the agency said.

“The SGL-2 reflects a reduction in liquidity risk following the filing of its 3Q 2023 financial statements on June 12, 2023, which reduced the risk of a default on its debt covenant and limited access to its revolver. Liquidity is supported by Moody's expectation that cash flow from operations will adequately cover capex over the next 12 to 18 months and that the company has sizeable availability ($550 million) on its $1.1 billion revolver that expires in 2027,” Moody’s said in a press release.

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