CORPORATESISSUER COMMENT 8 OCTOBER 2015VALEANT PHARMACEUTICALS INTL, INC. (VRX)Moodys Senior Unsecured Rating B1Moodys Outlook POSBond-Implied Rating B1CDS-Implied Rating B3EDF-Implied Rating A3As of 10/6/2015ANALYST CONTACTSAllerton G. Smith 212-553-4058 Sr Dir-Sr Research Analyst allerton.smith@moodys.comABOUT CAPITAL MARKETS RESEARCHAnalyses from Moodys Capital Markets Research, Inc. (CMR) focus on explaining signals from the credit and equity markets. The publications address whether market signals, in the opinion of the groups analysts, accurately reflect the risks and investment opportunities associated with issuers and sectors. CMR research thus complements the fundamentally-oriented research offered by Moodys Investors Service (MIS), the rating agency.CMR is part of Moodys Analytics, which is one of the two operating businesses of Moodys Corporation. Moodys Analytics (including CMR) is legally and organizationally separated from Moodys Investors Service and operates on an arms length basis from the ratings business. CMR does not provide investment advisory services or products.View the CMR FAQ Contact the CMR team Follow us on TwitterMoodys Analytics markets and distributes all Moodys Capital Markets Research, Inc. materials. Moodys Capital Markets Research, Inc. is a subsidiary of Moodys Corporation. Moodys Analytics does not provide investment advisory services or products. For further detail, please see the last page.Market Signals ReviewValeant Pharmaceuticals: Market-Implied Ratings Slip The bond-, CDS- and EDF'-implied ratings for Valeant have all fallen from recent peaks (Figure 1). As well, the three market-implied ratings gaps are all now wider.Three months ago the bond-implied rating for Valeant was Ba3. In the interim it varied between a high of Ba2 and the recent low point of B1. The bond-implied rating had not been at the B1 level since November of 2014. The current CDS-implied rating of B3 is one notch under the B2 level of 90 days ago. The EDF-implied rating was A1, fluctuated between Aa3 and Baa1, and resides at A3 today. Valeants share price fell 38% from its 12-month high of $262.52 on August 5 to $166.00 at present.FIGURE 1. VALEANT: MOODYS AND MARKET-IMPLIED RATINGS, 90 DAYS (DAILY DATA)MOODY'S ANALYTICS CORPORATES2 8 OCTOBER 2015 MARKET SIGNALS REVIEW: VALEANT PHARMACEUTICALS: MARKET-IMPLIED RATINGS SLIPInvestors may have become worried about the impact on Valeants business model if regulators crack down on drug price increases. Valeant, which has been the subject of several negative articles in the press, has been one of the most active acquirers in the pharmaceutical industry. The company raised alarms in some quarters for drastically raising prices on several drugs after it acquired them. Congressional Democrats have been asking the company to provide more information to help them understand how the company recently raised prices on two heart drugs.According t...
