Research Update: Germany-Based Generic Pharma Company Nidda BondCo GmbH Outlook To Negative On Higher Debt; 'B+' Rating Affirmed

The debt of generic pharma company Nidda BondCo GmbH (Nidda) is set to increase following its financial sponsors' decision to make operating company STADA Arzneimittel (STADA) fully private. Bain Capital and Cinven's acquisition of an additional 23.8% minority stake in STADA will be funded by €955 million of incremental debt at Nidda, the parent of the group's holding company. As a result, we expect our measure of Nidda's debt-to-EBITDA ratio to increase to about 8.0x in 2018 before declining to close to 7.0x in 2019, with limited headroom for unexpected operating or financing challenges. We are therefore revising our outlook on Nidda to negative from stable and affirming our 'B+' long-term issuer credit rating. We are also affirming the 'B+'

...+ The debt of generic pharma company Nidda BondCo GmbH (Nidda) is set to increase following its financial sponsors' decision to make operating company STADA Arzneimittel (STADA) fully private. Bain Capital and Cinven's acquisition of an additional 23.8% minority stake in STADA will be funded by 955 million of incremental debt at Nidda, the parent of the group's holding company. + As a result, we expect our measure of Nidda's debt-to-EBITDA ratio to increase to about 8.0x in 2018 before declining to close to 7.0x in 2019, with limited headroom for unexpected operating or financing challenges. + We are therefore revising our outlook on Nidda to negative from stable and affirming our 'B+' long-term issuer credit rating. We are also affirming the 'B+' issue rating on the first-lien debt and revising the recovery rating on the debt upward to '3' from '4'. We are affirming the 'B-' issue rating and '6' recovery rating on Nidda's unsecured debt. + The negative outlook reflects that we could lower...

Research Update