S&P rates Organon BB

S&P said it gave Organon & Co. a BB issuer rating. The issuer plans to separate from Merck & Co. Inc.

The agency also assigned BB ratings to its planned $2 billion dollar-denominated senior secured term loan B, $1 billion euro-denominated senior secured term loan B and a $2 billion term loan A. Organon also plans to sell $3 billion in senior secured notes and $1.5 billion in senior unsecured notes.

“Organon's business is highly cash generative in the near term, given expected growth in its women's health business from renewed promotion efforts post-spinoff and from premium branded pricing in its established brands portfolio. We think the established brands' segment will provide years of solid cash flows, as growing emerging markets frequently regard branded products as safer and more effective than alternatives,” S&P said in a press release.

However, the agency noted most of its products are off patent, and it expects sales to decline slowly as lower-cost generics penetrate these markets.

The outlook is stable. S&P said it expects substantial growth in Nexplanon and stabilization in the established brands segment, leading to adjusted debt to EBITDA remaining in the 3x-4x range.

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