S&P rates Endo loan BB, lowers notes

S&P said it assigned a BB rating to Endo International plc's proposed $2.965 billion senior secured term loan B facility due 2024.

Endo Luxembourg Finance Co. Sarl and Endo LLC are the co-borrowers.

The recovery rating is 1, indicating 90% to 100% expected default recovery.

The proceeds from this transaction will be used – together with $750 million of additional secured debt issued at a later date – to repay the company's existing term loan A due 2019, the existing term loan B due 2022 and for general corporate purposes.

The company also plans to extend the maturity of its $1 billion revolving credit facility, S&P noted.

The transaction is considered leverage-neutral, the agency said.

S&P also said it lowered the rating on the company's unsecured notes to B- from B.

The agency also said it revised the recovery rating to 6 from 5, indicating 0 to 10% expected default recovery.

The lower recovery rating on the unsecured debt reflects the higher amount of secured debt in the capital structure, S&P said.

The B+ corporate credit rating and negative outlook on Endo International continue to reflect expectations for limited de-leveraging in the near term as a result of weakening of its generic franchise, competitive pressures in its branded business, increased litigation costs and other negative developments, the agency said.

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