Fitch drops Elanco

Fitch Ratings said it downgraded Elanco Animal Health Inc.'s and Elanco US Inc.'s issuer default ratings to BB- from BB and senior secured debt ratings to BB+/RR1 from BBB-/RR1.

Fitch also downgraded Elanco’s senior unsecured notes to BB-/RR4 from BB/RR4.

The outlook was revised to stable from negative.

The agency said the actions reflect the operating headwinds facing the company, which has stressed the company's ability to return to its prior rating sensitivities including the maintaining of EBITDA leverage (total debt to operating EBITDA) below 4.5x.

However, Fitch said it expects the company will continue to generate positive free cash flow and gradually deleverage through a combination EBITDA growth and debt reduction.

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