Moody’s drops Grifols, loans, notes; rates loan Ba2

Moody's Investors Service said it downgraded Grifols SA’s corporate family rating to Ba3 from Ba2 and probability of default rating to Ba3-PD from Ba2-PD.

Concurrently, Moody's downgraded the ratings of the senior secured bank credit facilities, including a $700 million term loan A due 2020, $3.25 billion term loan B due 2021, €400 million term loan B due 2021 and €300 million revolving credit facility due 2019, to Ba2 from Ba1. The bank credit facilities are co-borrowed by Grifols World Wide Operations Ltd. and Grifols World Wide Operations USA, Inc.

The agency also downgraded the rating of the $1 billion senior unsecured notes due 2022 issued by Grifols World Wide Operations to B2 from B1.

Finally, Moody's assigned a Ba2 rating to the additional proposed $1.7 billion term loan due 2023.

The outlook on all ratings is stable.

Moody’s said the downgrade of the corporate family rating reflects the following inter-related drivers:

• Grifols’ leverage, as measured by Moody's-adjusted debt/EBITDA, will increase to 4.7 times, pro forma for the announced $1.85 billion largely debt-financed acquisition of Hologic Inc.'s NAT (Nucleic Acid Test) blood screening business, from 4 times as of Sept. 30; and

• Moody's expects that Grifols' leverage will slowly decrease to 4.5 times over the next 12 to 18 months based on a low-single-digit organic growth in the Diagnostics division and a high-single-digit organic growth in the Bioscience division.

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