Moody’s has given a corporate family rating (CFR) of ‘B3’ (a grade that falls within what is known as a junk bond) to the pharmaceutical company Grifolsafter the credit rating agency withdrew its ratings on the Catalan company five months ago, believing that it had “insufficient or inadequate” information to support their maintenance.
It has also assigned a probability of default rating (PDR) of ‘B3-PD’ to the Spanish firm, while has assigned instrumental ratings of ‘B2’ to the senior secured instruments issued by Grifols, Grifols World Wide Operations Ltd. and Grifols World Wide Operations USA.
At the same time, the credit rating agency has assigned instrumental ratings of ‘Caa2’ to the senior unsecured instruments issued by Grifols Escrow Issuer. So, Moody’s highlighted in a statement sent this Wednesday that the outlook for all ratings is positive..
The agency has detailed that the ‘B3’ rating “reflects the company’s good market position and its vertical integration in products derived from human blood plasma.”; the sector’s favorable fundamental demand drivers; barriers to entry into the industry due to regulation, customer loyalty and capital intensity; and its good product safety record.
“We also recognize the improved profitability and good liquidity that has been recently addressed with the issuance of €1.3 billion of senior secured bonds due 2030which fully repay the amounts drawn down under its revolving credit facility (RCF) and the €343 million of outstanding senior secured bonds maturing in February 2025,” Moody’s explained.
Maturities
However, the agency has warned that there are still around €3 billion of debt maturing in 2027 that will need to be addressed “in due course.” At the same time, the rating takes into account Grifols’ negative Moody’s-adjusted free cash flow (FCF) generation and high Moody’s-adjusted gross leverage.which stood at 7.2 times at the end of September 2024, values that are expected to improve up to the next 18 months.
On your side, Moody’s has highlighted that Grifols’ liquidity is “good” after the issuance of 1.3 billion euros in senior secured bonds maturing in 2030which will be used to repay the €343 million of outstanding bonds due February 2025, along with cash, and repay the drawn portion of its RCF, “leaving a totally undrawn RCF.”
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