Moody's affirms Valeant

Moody's Investors Service said it affirmed Valeant Pharmaceuticals International, Inc.'s Ba3 corporate family rating, Ba3-PD probability of default rating, Ba1 (LGD2, 16%) senior secured revolving credit facility and term loans and SGL-1 speculative grade liquidity rating and Valeant Pharmaceuticals International's B1 (LGD5, 73%) senior notes. The outlook remains negative.

The affirmation follows the announcement that Valeant will acquire privately held Bausch & Lomb, Inc. for about $8.7 billion using a combination of debt and equity. The agency said the affirmation reflects the significant scale, diversity, synergies and cash flow accretion that Valeant with derive from Bausch & Lomb.

However, the acquisition will increase pro forma leverage to more than 4.5 times. The negative outlook primarily reflects the leverage level, Valeant's aggressive acquisition strategy and the risks associated with integrating multiple large companies at once, Moody's said.

The ratings remain supported by Valeant's good size and scale, a high level of product and geographic diversity and the lack of any major patent cliffs relative to other pharmaceutical companies, the agency said.

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