S&P applies BBB- to Royalty Pharma loans

Standard & Poor's said it assigned its BBB- issue-level rating to RPI Finance Trust's (doing business as Royalty Pharma) proposed $2.7 billion of term loans, including a $200 million add-on.

The loans, along with cash, will finance the $3.3 billion acquisition of royalties on cystic fibrosis drug Kalydeco.

The increase in pro forma leverage to 4.3 times, from 2.6 times at Sept. 30 was in line with the agency’s expectations for the rating. Moreover, S&P said it believes that RPI will use some of its strong free cash flow to reduce leverage to below 4 times by the end of 2015, supporting its assessment of financial risk as "significant".

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