S&P rates Amneal loan BB-

S&P said it assigned its BB- issue-level rating to Amneal Pharmaceuticals LLC's proposed $2.7 billion senior secured term loan.

The recovery rating on the term loan is 4, reflecting an expectation for average (30%-50%; rounded estimate: 40%) recovery in the event of payment default.

Proceeds will be used to refinance all debt currently issued by Amneal and Impax Laboratories Inc. upon the merger of the two companies.

The corporate credit rating on Amneal is BB- and the outlook is negative.

“The BB- corporate credit rating reflects our expectation that, after the initial spike above 5x following the merger in 2018, the company's leverage ratio will improve to the mid-4x range in 2019,” S&P said in a news release.

“This is consistent with our expectation that Amneal's long-term leverage will generally remain at or below 4.5x and its annual discretionary cash flow (after tax distributions) will exceed $100 million per year.”

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