Moody's rates Endo notes Ba2

Moody's Investors Service said it assigned a Ba2 (LGD 2) rating to the proposed $750 million senior secured notes offering due 2024 of Endo Finance LLC, a subsidiary of Endo International plc.

The notes are being co-issued by Endo Designated Activity Co. and Endo FinCo Inc.

There are no changes to Endo's existing ratings, including the B2 corporate family rating of Endo Luxembourg Finance I Co. Sarl.

Proceeds will be used to refinance Endo's existing term loan A and B, Moody's said.

The ratings reflect the company's persistently high financial leverage and expectation of significant cash outflows, the agency said.

The rating also is constrained by the risk that Endo faces further payouts related to legal liabilities in 2018 and beyond, Moody's said.

Pricing and competitive headwinds will drive severe declines in Endo's base U.S. generics business, notably its portfolio of opioid products, and its branded pain portfolio, the agency said.

As a result, Moody's said it believes leverage will remain elevated with debt-to-EBITDA 5 times higher in the next 12 to 18 months.

The ratings are supported by strong scale and diversity by product, the agency said, and its good balance between branded and generic drugs.

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