Moody's ups ConvaTec notes to B3, rates notes Caa1

Moody's Investors Service said it changed the outlook on ConvaTec's B2 corporate family rating to negative from stable.

Concurrently, Moody's assigned a provisional Caa1 instrument rating (with a loss given default assessment of LGD6, 91%) to the planned issuance of around $800 million of HoldCo senior notes.

The agency also assigned a B2 corporate family rating and B2-PD probability of default rating to ConvaTec Healthcare A Sarl. (Luxembourg, CvT A), which, in the corporate structure, is one level higher than ConvaTec Healthcare B Sarl (CvT B) to better account for the economic cost of the planned Holdco note issuance, which is outside of the restricted group.

Moody's will subsequently withdraw CvT B's B2 corporate family rating and B2-PD probability of default rating and affirmed its subsidiaries secured senior bank facilities at Ba3 (LGD2, 24%). Furthermore, the rating agency has upgraded ConvaTec Healthcare E SA's senior unsecured notes to B3 (LGD5, 71%) from Caa1 (LGD5, 85%).

The proceeds of the proposed $800 million HoldCo note issuance will be used to fund a dividend to shareholders via part redemption of outstanding preferred equity certificates.

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