Moody’s lowers Valeant, facilities, debt

Moody's Investors Service said it downgraded the ratings of Valeant Pharmaceuticals International, Inc. and subsidiaries, including the corporate family rating to B3 from B2 and probability of default rating to B3-PD from B2-PD.

Other downgrades include the senior secured bank credit facilities to Ba3 (LGD 2) from Ba2 (LGD 2) and senior unsecured debt to Caa1 (LGD 5) from B3 (LGD 5).

The SGL-3 speculative grade liquidity rating was affirmed.

The outlook is negative.

Moody’s said the downgrade reflects Valeant's challenges in turning around its specialty pharmaceuticals business, resulting in weak earnings trends and financial leverage remaining above the agency’s earlier expectations.

"Incorporating recent operating trends as well as exposure to upcoming patent expirations, we anticipate that Valeant's debt/EBITDA will remain above 7.0x at least through 2017," Moody's senior vice president Michael Levesque said in a news release.

With higher financial leverage, Valeant will become more vulnerable to any significant operating setbacks or legal liabilities arising from government investigations, the agency added.

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