Moody's rates Valeant loans Ba1, notes B1

Moody's Investors Service said it assigned corporate family and probability-of-default ratings of Ba3 to Valeant Pharmaceuticals International, one of the main subsidiaries of Valeant Pharmaceuticals International, Inc. (New Valeant).

The agency also assigned a Ba1 (LGD2, 23%) ratings to the senior secured term loans and a B1 (LDG5, 72%) raing to the senior unsecured notes of $1 billion.

New Valeant is being formed through the merger of Valeant and Biovail Corp.

Moody's also assigned a Ba1 rating to Valeant's new senior secured credit facilities, a B1 rating to Valeant's proposed senior unsecured notes and a SGL-1 speculative grade liquidity rating.

The outlook is positive.

Valeant's Ba3 rating reflects the combined entity's solid size and scale, good product and geographic diversity, and lack of major patent cliffs relative to other specialty pharmaceutical companies, the agency said.

Ratings are somewhat constrained by integration risks associated with the merger, mixed product utilization trends and the likelihood of future acquisitions, the agency noted.

In addition, leverage is moderately high, estimated at 3.9x pro forma before considering synergies.

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