Fitch assigns B+ to Syneos

Fitch Ratings said it assigned an expected B+ issuer default rating to Syneos Health Inc. (Star Intermediate Holdings, Inc. and its subsidiary, Star Parent, Inc.) and expected BB/RR2 ratings to its proposed senior secured credit facilities and senior secured notes. The outlook is stable.

“The B+(EXP) IDR reflects Syneos' competitive position as one of the leading contract research organizations (CROs) in the global markets, significant portion of contracted/recurring revenue, diversified customer base and service offerings, and consistent positive cashflow generation.

“The rating is currently constrained by high gross leverage post-closing of the LBO transaction, execution risk around Syneos' business turnaround strategies and cost savings plan, and uncertainties around macroeconomic conditions and availability of biotech funding,” Fitch said in a press release.

The agency said it believes Syneos’ profit margins would need to meaningfully widen and sustainably in the near term for gross leverage to be sustained below 5x, a level commensurate with the BB- rating.

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