CORPORATESISSUER COMMENT 17 March 2016RATINGSVALEANT PHARMACEUTICALS (VRX) Moodys SRA rating B2Moodys Outlook RURBond-Implied Rating Caa1CDS-Implied Rating Caa1EDF-Implied Rating B3As of March 16, 2016ContactsAllerton 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.Valeant Pharmaceuticals International, IncValeant: Market-Implied Ratings Dip to Low Points The bond- , CDS-, and EDF'-implied ratings for Valeant Pharmaceuticals International, Inc. weakened recently to their worst levels of the last several years.Valeant management announced on March 15 that: the company would not achieve previously estimated earnings goals, it was pulling back from its prior strategies (of acquiring established drugs and raising their prices), and it has covenants in its debt agreements that could lead to debt acceleration if it does not file its 10-K report within specified cure periods. The companys stock fell 51% to (NYSE) $33.51 following the disclosures. Valeant has not yet filed its 2015 10K, and announced in February that it had discovered accounting errors that might force an earnings restatement.As a result of these developments, Moodys downgraded Valeant and the ratings remain under review; please see Moody's rating discussion below.FIGURE 1. VALEANT: MOODYS SRA AND MARKET-IMPLIED RATINGS, LAST 60 DAYS (DAILY DATA)Valeants bond-implied rating fluctuated between Ba2 and B3 for most of 2015 (with a very quick dip to Caa1 in November), and between B1 and B3 in early 2016. It has deterioratedMOODY'S ANALYTICS CORPORATES2 17 March 2016 Valeant Pharmaceuticals International, Inc: Valeant: Market-Implied Ratings Dip to Low Pointssince early March 2016 to Caa1, matching the implied-ratings multi-year low point (Figure 1). The bond-implied rating high point was Ba2...
