Moody’s rates Quintiles IMS notes Ba3, loans Ba1

Moody's Investors Service said it assigned Ba3 ratings to the proposed $900 million senior unsecured euro notes offering and Ba1 ratings to the proposed senior secured term loans due 2024 of Quintiles IMS Inc.

There are no changes to the company’s existing ratings, including the Ba2 corporate family rating.

Quintiles IMS will use the proceeds to refinance its existing senior secured term loan B tranches and for general corporate purposes.

Moody's said it believes the proceeds beyond the refinancing of roughly $1.5 billion, will most likely be used to fund share repurchases and M&A.

After the close of the transaction and debt repayment, the agency expects to withdraw the ratings of the existing term loan B tranches.

On Feb. 14, Quintiles IMS announced an increase to its share repurchase authorization to $2.5 billion from $1.5 billion. It has $1.5 billion authorization remaining, having repurchased $1 billion in the fourth quarter 2016.

“The ratings are constrained by Moody's expectations that the company will continue to debt-fund share repurchases. Moody's approximates debt to EBITDA increases to 4.4 times with this transaction,” the agency said in a news release.

“However the rating agency expects leverage to improve to around 4 times by the end of 2017.”

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