Moody's downgrades Grifols

Moody's Investors Service said it downgraded Grifols SA’s corporate family rating to B2 from B1 and its probability of default rating to B2-PD from B1-PD. The agency also lowered Grifols’ senior unsecured rating and the backed senior unsecured ratings of Grifols Escrow Issuer, SAU to Caa1 from B3 but affirmed the Ba3 senior secured ratings of Grifols, Grifols World Wide Operations Ltd. and Grifols World Wide Operations USA, Inc.

“The downgrade to B2 reflects Grifols weak credit metrics and our expectation that they will remain outside of the boundaries for the B1 rating in the next 12 to 18 months. Persistence of an elevated leverage and weaker-than-expected operating performance also prompted management changes, notably the appointment of a new executive chairman, and the launch of an extensive cost-savings program.

“Grifols will start to face large debt maturities in 2025, with two bond maturities in the first half of 2025 totaling close to €1.9 billion, and the refinancing of these instruments well in advance of their maturity will be key to supporting the B2 rating,” Moody’s said in a press release.

On the positive side, the agency said it forecasts an incremental decline in leverage to around 7x in 2024, mostly driven by EBITDA growth and a program that targets €400 million in savings. Moody’s is also predicting free cash flow will turn positive in 2023.

The outlook remains negative.

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