Moody’s cuts Omnicare loans, notes; rates notes Ba2

Moody's Investors Service said it revised Omnicare, Inc.'s outlook to stable from negative and upgraded its speculative grade liquidity rating to SGL-3 from SGL-4.

The agency also affirmed Omnicare's Ba3 corporate family rating and Ba3-PD probability of default rating.

At the same time, Moody's assigned a Ba2 rating to the company's proposed $700 million senior unsecured notes while lowering the rating of existing senior unsecured credit facilities to Ba2 from Baa3, and the rating of the senior subordinated notes to B1 from Ba3.

The B2 rating on the senior debentures and PIERS trust preferreds was affirmed.

Moody’s said the Ba2 rating on the new bonds, that are rated at the same level as the senior unsecured bank facilities, reflects the senior unsecured guarantee from certain of the company's existing and future direct and indirect domestic subsidiaries. The notes and guarantees will be general senior unsecured obligations ranking equally in right of payment with the guarantors' existing and future senior unsecured debt, including borrowings under the senior credit facilities.

The rating changes on the existing senior credit facilities and subordinated notes mainly reflect the shift in the capital structure mix, Moody’s said. The increase in senior unsecured debt and reduction in senior subordinated debt reduces recovery expectations for both classes in a distressed scenario based on Moody's Loss Given Default methodology.

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