S&P gives BB to Valeant loans

Standard & Poor’s said it assigned its BB issue-level ratings to Valeant Pharmaceuticals International Inc.’s proposed issuance of a $1 billion term loan A maturing in 2020 and a $4.55 billion term loan B maturing 2022.

At the same time, S&P said it placed these ratings on CreditWatch with positive implications. S&P assigned a recovery rating of 2 to these notes, reflecting an expectation for substantial recovery (70% to 90%; at the higher end of the range) on these obligations in the event of a payment default.

S&P said it expects to revise the recovery rating on the company’s secured debt to 1 from 2 and to raise the issue-level rating to BB+ from BB when the Salix acquisition is consummated.

The company plans to use the proceeds of new debt for the acquisition of Salix Pharmaceuticals Ltd.

S&P said its BB- corporate credit rating on Valeant reflects S&P’s assessment of the company’s business risk as “satisfactory” and the financial risk profile as “aggressive.”

The outlook is stable.

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