Fitch assigns Grunenthal BB, notes BB+

Fitch Ratings said it assigned Grunenthal Pharma GmbH & Co KG an expected BB long-term issuer default rating with a stable outlook. Fitch also gave expected BB+/RR2 senior secured debt ratings for the planned €500 million of senior secured notes to be issued by Grunenthal's direct subsidiary Grunenthal GmbH.

“Grunenthal's BB IDR reflects its conservatively leveraged niche scale, albeit cash generative operations, with managed organic portfolio decline supported by mid to larger scale acquisitions of established cash generative drugs with low integration risk in our view,” the agency said in a press release.

“Given the senior secured nature of the entire debt issued by Grunenthal (single debt class) we classify its debt as 'category 2 first lien' under the generic approach for rating instruments of companies in the BB rating category based on Fitch's corporates recovery ratings and instrument ratings criteria. Therefore, we rate Grunenthal's senior secured debt one notch above the assigned IDR leading to a BB+(EXP) senior secured notes rating with an RR2,” Fitch said.

The stable outlook is backed by an expectation of a disciplined approach to acquisitions and adherence to internal financial policy leading to leverage levels with FFO leverage remaining below 4.5x, fully aligned with the assigned rating, Fitch said.

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