Fitch rates Glenmark notes BB

Fitch Ratings said it assigned a rating of BB to Glenmark Pharmaceuticals Ltd.’s proposed dollar-denominated senior unsecured notes.

The proposed notes are rated at the same level as Glenmark’s issuer default rating because they will represent its direct, unconditional, unsecured and unsubordinated obligations. Glenmark’s credit profile remains broadly unaffected by the proposed notes, because the company intends to use the proceeds to repay debt.

Fitch said it expects financial leverage, measured by adjusted net debt/operating EBITDAR, of 2.5x in the financial year ended March 2019 (FY19) to stay broadly stable over the next few years. Glenmark is likely to continue to incur moderate capex on fixed assets and to acquire territorial sale rights for other companies’ drugs, consistent with our view of the company’s growth strategy. This should lead to moderate negative free cash generation over the next few years.

“Our rating case does not include debt reduction from a potential sale of Glenmark’s active pharmaceutical ingredient business or other non-core pharmaceutical assets,” said Fitch in a press release.

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