Moody's slices 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 cut the corporate family rating to Caa3 from Caa1 and the probability of default rating to Ca-PD from Caa1-PD. Moody's also lowered the ratings on the company's senior secured debt to Caa2 from B3, the unsecured ratings to C from Caa3 and the secured second-lien regular bond/debenture rating to Ca from Caa2. There is no change to the SGL-3 speculative grade liquidity rating. The outlook was revised to stable from negative.

"The downgrades reflect Moody's view that Endo's probability of default, including the potential for a distressed exchange-type of restructuring, is very high over the near term," said Vladimir Ronin, Moody's lead analyst for the company, in a press release.

"At current levels of performance, with significant erosion in Vasostrict franchise, ongoing cash outflows related to various legal proceedings, and exposure to a material opioid-related litigation settlement, Endo's capital structure is untenable. However, meaningful recovery value will still likely be afforded to the first lien secured creditors in a pre-emptive restructuring given the value of company's branded franchises, sizable generics business and company's meaningful cash balance," added Ronin.

The stable outlook considers expectations that Endo will continue facing challenges in stabilizing and improving operating performance, but that ratings now reflect assumed recovery levels under an anticipated pre-emptive restructuring, Moody’s said.

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