S&P assigns Endo notes CCC+

S&P said it assigned a CCC+ issue and 6 recovery ratings to Endo International plc’s proposed $1.11 billion of second-lien secured notes to be sold by its Endo Designated Activity Co.

Endo International and its subsidiaries will guarantee the notes.

The 6 recovery rating indicates S&P’s expectation of negligible (0%-10%; rounded estimate: 0%) recovery in the event of default. This rating reflects about $6 billion of first-lien debt ahead in priority, S&P said.

These second-lien notes are part of an exchange offer in which the company proposes to replace $2.32 billion of unsecured notes maturing in 2023 and 2025 with a combination of first-lien secured notes, second-lien secured notes and additional unsecured notes maturing in 2027 and 2028.

“We do not view this transaction as a distressed exchange (i.e., as a default), as we believe lenders are receiving adequate compensation (higher interest rates and a more senior position in the capital structure) for the extension of the maturity. We view the senior position as particularly valuable in the context of the risk of substantial opioid-related liabilities, as we expect secured lenders would have priority over unsecured litigation claims,” S&P said in a press release.

The said it views the exchange as a positive for Endo.

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