Moody's downgrades Endo

Moody's Investors Service said it downgraded the ratings of Endo Luxembourg Finance I Co. Sarl, and other subsidiaries of Endo International plc.

The agency lowered the corporate family rating to Caa1 from B3 and the probability of default rating to Caa1-PD from B3-PD. Moody's also cut the ratings on the company's senior secured debt to B3 from B2 and the unsecured ratings to Caa3 from Caa2.

However, Moody's affirmed the secured second-lien regular bond/debenture, at Caa2, and there is no change to the SGL-3 speculative grade liquidity rating, but revised the outlook to negative from stable.

“The rating downgrades reflect Moody's expectation that Endo's potential cash outflows related to opioid litigation will hinder its ability to improve operational performance or meaningfully deleverage. The downgrade also reflects ongoing erosion in Endo's U.S. generics business, as well as Moody's view that Endo has experienced a material reduction in its capital market access and enterprise value. This adds pressure to the company's ongoing business challenges,” the agency said in a press release.

The revised outlook indicates Endo's increasing exposure to opioid-related litigation and settlement involving cash outflows. “The negative outlook also reflects Moody's view that Endo's earnings will decline in 2022, but that it's large cash balance will provide adequate liquidity for operations,” the agency said.

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