S&P gives Baxter notes A-

S&P said it gave its A- issue-level rating to Baxter International Inc.'s planned senior unsecured notes and placed the new rating on the CreditWatch with negative implications with Baxter’s other ratings.

The company is expected to use the proceeds, together with $4 billion borrowed under its term loan facility and cash on hand, to fund the acquisition of Hill-Rom Holdings Inc. and its debt, and pay fees and expenses. The transaction is expected to close by early 2022.

“The CreditWatch placement reflects the elevated likelihood that we will lower our rating on Baxter and its existing and proposed debt upon the close of the transaction because we expect the incremental debt to lead to a significant increase in leverage. Assuming the company remains committed to its publicly stated leverage-reduction plan, which we expect will improve its S&P Global Rating-adjusted leverage to about 3.5x in 2023, we would likely limit the downgrade to two notches, to BBB with a stable outlook from A-,” S&P said in a press release.

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