S&P rates Zimmer facility BBB

S&P said it assigned its BBB issue-level ratings to Zimmer Biomet Holdings Inc.'s senior unsecured credit facility, including its $1.5 billion multicurrency revolving credit facility and a $750 million term loan.

Term loan proceeds will be used to repay outstanding balances on the company’s revolver, which was drawn to fund its previously announced acquisition of LDR Holding Corp. The new $1.5 billion revolver will replace the existing revolving credit facility.

Zimmer’s BBB corporate credit rating reflects the agency’s assessment of the company's business risk as strong and the financial risk profile as significant.

The outlook is stable.

S&P said Zimmer’s business risk profile reflects its substantial scale (pro forma 2016 revenues of about $7.5 billion), above-average profitability (adjusted EBITDA margins exceeding 35%), substantial product concentration in hip and knee (combined account for 64% of revenues), good geographic diversity, substantial intellectual property and high barriers to entry.

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