Moody's assigns Grunenthal, notes B1

Moody's Investors Service said it assigned a B1 corporate family rating and a B1-PD probability of default rating to Grunenthal Pharma GmbH & Co. KG. Moody's also gave a B1 rating to the proposed €500 million of guaranteed senior secured notes due 2026 issued by Grunenthal GmbH.

“The B1 rating of Grunenthal incorporates (1) its diversified product portfolio, with the top three drugs accounting for 46% of its 2020 revenue, despite a focus on pain management; (2) its relatively sticky customer base, which slows down the natural sales erosion of its mature drug portfolio; and (3) its good liquidity following the debt refinancing,” Moody’s said in a press release.

However, the rating also considers its small size, with €1.3 billion of revenue in 2020, limiting economies of scale and increasing earnings volatility, its limited late-stage pipeline and its mature drug portfolio, the agency said.

Grunenthal will use the proceeds to refinance its debt.

Besides the new notes, Grunenthal’s capital structure consists of a €92.5 million term loan A, a €350 million term loan B, a €400 million undrawn revolver and €75 million of Schuldschein notes all issued at the level of Grunenthal GmbH, the group’s main operating company.

The outlook is stable, reflecting the position of the earnings erosion of its drug portfolio will remain moderate, the agency said.

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