Moody’s: ConvaTec loan Ba2

Moody’s Investors Service said it assigned a Ba2 rating to the proposed $1.85 billion senior secured credit facilities by ConvaTec Inc. and ConvaTec Healthcare ESA, the subsidiary companies of ConvaTec Healthcare A Sarl.

The agency also said it affirmed ConvaTec Healthcare A’s B2 corporate family rating and B2-PD probability of default rating.

The outlook remains negative.

The proceeds will be used to refinance the company’s existing senior secured term loan due 2016 and senior secured notes due 2017, Moody’s said, and to pay related fees and expenses.

The new credit facility will be comprised of a $200 revolving credit facility and $1.65 billion term loans denominated in euros and dollars.

The new revolver will replace the existing $250 million senior secured revolving credit facility that expires this year, the agency said.

Moody’s said it expects the company’s operating performance to stabilize in the coming year despite its recently reported weak operating performance and near-term earnings headwinds from unfavorable foreign-exchange movements.

ConvaTec’s diversified business franchise, solid market positions across business units and recurring nature of some of its revenue base provide a buffer against operating challenges, the agency said.

There is significant downside risk to the rating should operating performance and the pace of de-leveraging deviate from current expectations, so that is the reason for the negative outlook, Moody’s said.

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