Moody's rates King Pharmaceuticals loans Ba1

Moody's Investors Service said it affirmed King Pharmaceuticals' Ba3 corporate family rating and assigned a rating of Ba1 (LGD2, 16%) to its proposed new senior secured revolving credit agreement of $500 million due 2015.

The outlook is stable.

Moody's upgraded the speculative-grade liquidity rating to SGL-1 from SGL-2, reflecting the improved borrowing capacity and headroom under financial covenants.

King's liquidity profile also benefits from high levels of cash and short-term investments and positive free cash flow expected even after the recent launch of generic versions of Skelaxin, according to the agency.

The affirmation reflects the company's good positions in niche pharmaceutical markets, an interesting pipeline of pain products and diversity provided by its animal health business, the agency said.

These strengths are offset by declining Skelaxin sales following recent generic launches, uneven sales trends in other franchises and industry-wide challenges related to pipeline execution, the agency noted.

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