S&P rates Watson Pharmaceuticals loan BBB-, lowers notes to BB+

Standard & Poor's said it affirmed its BBB- corporate credit rating on Watson Pharmaceuticals Inc.

The agency said that this and other existing ratings on the company were removed from CreditWatch, where they were placed with negative implications on March 13, following the company's announcement that it was acquiring Andrx Corp. for $1.9 billion in cash.

The outlook is negative.

Also, S&P said it assigned its BBB- rating to Watson's $1.15 billion senior unsecured credit facility, consisting of a $500 million revolver and a $650 million term loan, both due in 2011.

In addition, S&P said it lowered its rating on Watson's $575 million in senior unsecured convertible notes due 2023 to BB+ from BBB- to reflect the notes' structural subordination to the $1.15 billion credit facility.

The agency noted that the CreditWatch removal reflects Watson's increased diversification of earnings and cash flows following the completion of the Andrx acquisition, the expectation for continued solid free cash flows and its belief that Watson will quickly de-lever following the acquisition.

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