Moody’s gives Syneos, loans, notes B1

Moody's Investors Service said it assigned a B1 corporate family rating and B1-PD probability of default rating to Star Parent, Inc. (Syneos Health Inc.). The agency also assigned a B1 rating to the planned senior secured first lien facility comprised of a $500 million revolving credit facility and $2 billion term loan B due 2030. Concurrently, Moody's assigned a B1 rating to the $1.7 billion of senior secured notes due 2030. The outlook is stable.

The term loan and notes will be used, in combination with nearly $4 billion of equity, to fund the leveraged buyout of Syneos, including repaying its debt, as well as fees and expenses. The deal is expected to close in the second half of 2023. After the close, and once the outstanding debt is fully repaid, Moody's said it plans to withdraw the ratings of Syneos.

"Notwithstanding Syneos' meaningful decline in the clinical solutions book-to-bill ratio in recent quarters, Moody's expects the company to return to growth, and stabilize profitability margins, over the next 12 to 18 months," said Vladimir Ronin, Moody's lead analyst for the company, in a press release.

"While delays in customer award decisions and softening in request for proposal flow in both small to mid-sized and large pharma customers will result in weakening of credit metrics in 2023, Moody's expects Syneos to benefit from ongoing cost saving initiatives, as well as the long-term trend of growing demand from the pharmaceutical and biotech industry for outsourced clinical research services," continued Ronin.

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