S&P lowers Galapagos Holding

S&P said it lowered the issuer credit rating on Galapagos Holding SA to CCC- from CCC+ and lowered the ratings on its debt by two notches.

The agency said it believes Galapagos Holding's high debt burden is unsustainable and that its continued negative free cash flow could cause a default situation.

Although Galapagos has freed up some liquidity resources in the past with asset sales and renegotiated its covenant terms to ensure short-term liquidity, S&P said it believes that operating performance is unlikely to improve enough to cover its interest payments due in 2019.

The negative outlook reflects a view that Galapagos Holding could run out of liquid funds or experience a default event to address the long-term sustainability of its capital structure, the agency said.

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