Moody's upgrades Elan

Moody's Investors Service said it upgraded Elan Corp., plc's corporate family rating to B2 from B3 and probability-of-default rating to B1 from B2 and assigned an SGL-1 speculative-grade liquidity rating to the company.

The agency also upgraded Elan Finance plc's $850 million senior notes due 2011, $300 million floating-rate senior notes due 2011, $465 million senior notes due 2013 and $150 million floating-rate senior notes due 2013 to B2 (LGD4, 66%) from B3 (LGD4, 65%).

This completes the review for possible upgrade that began on July 2 when Johnson & Johnson announced that it agreed to acquire an 18.4% interest in Elan for $1 billion. The outlook is positive.

The upgrade follows the recent completion of Elan's transaction with Johnson & Johnson. The agency said the cash inflow from Johnson & Johnson represents a significant liquidity infusion for Elan and a reduction in its net debt position.

Consideration of higher ratings is currently precluded by significant recent attention on the number of progressive multifocal leukoencephalopathy cases arising in Tysabri patients, Moody's said.

The positive outlook reflects the potential for an additional upgrade if Elan continues its recent track record of good operating performance, Moody's said.

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