Moody's upgrades PPD

Moody’s Investors Service said it upgraded Pharmaceutical Product Development, LLC and Jaguar Holding Co. II’s $175 million senior secured revolving credit facility due 2016 and $1.45 billion senior secured term loan due 2018 to Ba2 (LGD2) from Ba3 (LGD2) and affirmed their $575 million senior notes due 2019 at B3 (LGD4). The agency also affirmed parent company Jaguar Holding Co. I’s corporate family rating at B2, probability of default rating at B2-PD and unsecured notes due 2017 at Caa1 (LGD5). The outlook is stable.

Jaguar Holding Co. I is issuing an incremental $600 million of its notes to fund a dividend to equity sponsors Carlyle Group and Hellman & Friedman. The agency said these notes are structurally subordinated to the notes issued at PDD, and the upgrade to the senior secured credit facilities reflects the additional subordinated debt in the capital structure.

Moody’s said PPD's B2 rating reflects the company's very high financial leverage, aggressive financial policies and risks inherent in the contract research organization industry, which is highly competitive, has high reliance on the pharmaceutical industry and is subject to cancellation risk.

The B2 rating is supported by PPD's significant scale, leading breadth of services and strong reputation, which Moody's believes gives the company competitive advantages over many peers in the highly fragmented industry.

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