S&P cuts Catalent debt, rates notes B+

S&P said it lowered its issue-level rating on Catalent Inc.'s senior unsecured debt to B+ from BB- and revised the recovery rating to 5 from 4, following the company's announcement that it will issue new debt at this level of the capital structure. The 5 recovery rating indicates an expectation for modest (10%-30%; rounded estimate: 25%) recovery in the event of a payment default.

At the same time, the agency assigned its B+ issue-level rating to the new $450 million senior unsecured notes due 2026 issued by operating subsidiary Catalent Pharma Solutions Inc. The 5 recovery rating indicates an expectation for modest (10%-30%; rounded estimate: 25%) recovery.

The corporate credit rating on Catalent remains BB- with a stable outlook.

“The lower expectations for recovery for the senior unsecured debt reflects the higher proportion of unsecured debt in the capital structure following the financing and the fact that all of Cook Pharmica's value is derived from domestic subsidiaries that will guarantee the company's secured debt, leaving relatively limited incremental value for unsecured creditor in a default scenario,” S&P said in a news release.

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