Olympus Corp.

The stable rating outlook reflects our expectation that Olympus' ratio of debt to EBITDA will generally stay below 1.5x in fiscal 2021 and thereafter, even as the company steps up growth investments. We also believe its EBITDA margin will steadily improve toward 20% or above as it maintains its dominant position in the gastrointestinal endoscope market and moderately expands its share in the therapeutic solutions market. We may consider a downgrade if we see a stronger likelihood of any one of the following: Its debt to EBITDA staying above 1.5x in fiscal 2021 and thereafter. This could occur if the company executed large M&A or its earnings were sluggish for a long period ; or Its EBITDA margin staying below

...We expect Olympus Corp.'s debt-to-EBITDA ratio will recover to below 1.5x, one of our downgrade thresholds, by the end of March 2022. The ratio will likely deteriorate to around 2.5x as of the end of fiscal 2020 (ending March 31, 2021), due mainly to the impact of the COVID-19 pandemic, and in part to several small acquisitions. However, we expect the ratio will recover to and stay at a level commensurate with the rating in fiscal 2021 and thereafter. This is based on our view that the company's performance and EBITDA will likely rebound as the pandemic recedes....

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