U.S. specialty pharmaceutical manufacturer Valeant is merging with Ontario-based competitor Biovail Corp. (unrated). We are affirming our ratings on Valeant, including our 'BB-' corporate credit rating and the 'B' issue-level and '6' recovery ratings on the company's existing subordinated notes. At the same time, we are assigning a preliminary 'BB+' issue-level rating and a preliminary '1' recovery rating to the company's proposed $1.875 billion senior secured credit facility and a preliminary 'B+' issue-level rating and a preliminary '5' recovery rating to the company's proposed $1 billion of senior unsecured notes. The stable outlook reflects our expectation that although the company will use its higher cash flows to reduce leverage, a reduction to less than 2x will require 12 to 24
