S&P downgrades Capsugel

Standard & Poor's said it lowered the corporate credit rating on Capsugel Holdings SA to B+ from BB- following news that the company plans to issue $415 million in new debt to fund a sponsor dividend.

The notes will be issued by a newly created holding company, Capsugel SA.

The outlook is stable.

S&P said it subsequently withdrew the B+ corporate credit rating at Capsugel Holdings and assigned a B+ corporate credit rating to Capsugel SA, the new parent entity.

The downgrade follows news that Capsugel will issue $415 million in new debt to fund a sponsor dividend, increasing pro forma adjusted debt leverage to more than 6.5x, said Shannan Murphy, an S&P analyst.

This is a departure from the previous expectation that debt leverage would decline below 5x this year due to debt repayment and EBITDA growth, Murphy said in a press release.

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