S&P rates Ortho-Clinical units loan B-

S&P said it assigned its B- issue-level rating and 3 recovery rating to the proposed $375 million senior secured term loan that will be co-issued by Ortho-Clinical Diagnostics Bermuda Co. Ltd.'s (Ortho-Clinical) subsidiaries Ortho-Clinical Diagnostics SA and Ortho-Clinical Diagnostics Inc. The 3 recovery rating indicates the expectation for meaningful (50%-70%; rounded estimate: 60%) recovery in the event of a payment default.

Ortho-Clinical will use the proceeds to partially refinance its senior notes due 2022. The ratings on the company's existing term loan and senior notes are unchanged.

“Our B issuer credit rating on parent Ortho-Clinical continues to reflect our expectation that the company's leverage will remain high at more than 7.5x while its discretionary cash flow generation stays minimal at about $40 million in 2019 and 2020. The rating also continues to reflect our view that the company operates in a very mature sector with modest growth prospects and elevated pricing pressures,” said S&P in a press release.

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