Moody’s gives B2 to Synlab loan

Moody's Investors Service said it assigned a B2 rating to the €300 million senior secured term loan due 2022 borrowed by Synlab Bondco plc, a subsidiary of Synlab Unsecured Bondco plc.

Synlab's other ratings are unchanged, namely, the B2 corporate family rating, B2-PD probability of default rating, the B2 ratings of the €1.84 billion senior secured notes due 2022 issued by Synlab Bondco and the Caa1 rating of the €375 million senior unsecured notes due 2023 issued by Synlab Unsecured.

The outlook is stable.

Synlab Bondco borrowed the €300 senior secured term loan in September to repay the €125 million drawn on the €250 million super senior secured revolving credit facility (unrated) due 2021 and finance future acquisitions.

Moody’s said the action reflects the following interrelated drivers:

• The new €300 million senior secured term loan ranks pari passu with other B2-rated senior secured notes of the company;

• Synlab's leverage, as measured by Moody's-adjusted debt/EBITDA, increased to 6.8 times (pro forma for the completed acquisitions and the new term loan) from 6.4 times as of June 30 because the company has increased its gross debt; and

• Moody's nevertheless expects that Synlab's leverage will trend toward 6.0 times within the next 12 to 18 months as the company spends available cash on EBITDA-accretive acquisitions, derives synergies from completed acquisitions and grows revenue organically in the low mid-single-digit percent range.

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