Moody's rates Actavis notes Baa3

Moody's Investors Service said it assigned a Baa3 rating to the new notes offering of Actavis Funding SCS (Luxembourg), an indirect subsidiary of Actavis plc and a parent company of Actavis, Inc. The outlook is stable.

A portion of the note proceeds will be used to help fund the cash portion of the $26 billion acquisition of Forest Laboratories, Inc. (Ba1/review for upgrade).

The agency said Actavis' Baa3 rating reflects the company's significant size and scale in the global generic pharmaceutical market, track record of deleveraging following acquisitions and willingness to use equity in order to maintain credit metrics that are generally in line with Moody's expectations for an investment-grade rating.

The rating is constrained by the company's aggressive acquisition appetite and by elevated financial leverage following the acquisition of Forest, the agency said. Moody's estimates that the initial pro forma ratio of debt to EBITDA will be just under 4 times (not including any future cost savings or synergies) when the acquisition closes in mid-2014.

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