Moody's cuts Emergent BioSolutions

Moody's Investors Service said it downgraded Emergent BioSolutions Inc.’s ratings, including the corporate family rating to Ba3 from Ba2, the probability of default rating to Ba3-PD from Ba2-PD, the senior unsecured rating to B1 from Ba3 and speculative grade liquidity rating to SGL-2 from SGL-1.

“The downgrade reflects earnings headwinds related to declines in the contract development and manufacturing organization (CDMO) business caused by lower Covid-19 vaccine demand, and in the nasal naloxone franchise caused by generic competition. These challenges pressure the company's overall growth outlook and raise its financial leverage,” Moody’s said in a press release.

The downgrade to SGL-2 primarily reflects the expectation for covenant cushion tightening over the next 12 to 18 months as earnings erode, the agency said.

The outlook remains negative.

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