Fitch affirms Glenmark Pharmaceuticals at BB, withdraws proposed bond rating
Jul 10, 2020
Singapore, July 10 : Fitch Ratings has affirmed Glenmark Pharmaceuticals' long-term issuer default rating at BB with a stable outlook.
The agency has also affirmed Glenmark's 200 million dollars 4.5 per cent senior unsecured notes due 2021 at BB. The notes are rated at the same level as the issuer default rating because they constitute Glenmark's direct and senior unsecured obligations.
At the same time, Fitch has withdrawn the rating on Glenmark's proposed US-dollar bonds assigned in January 2020 as the company chose not to proceed with the offering.
Glenmark's geographic diversification and satisfactory record of regulatory compliance mitigate the business risk arising from its small size and support its rating relative to larger global generic drug makers.
The rating affirmation also factors in Glenmark's adequate product pipeline which combined with robust long-term growth prospects in India will limit the impact on profitability from continued pricing pressure in the US generic pharmaceutical market.
Glenmark's de-risking strategies in its novel drug development programme will preserve its financial flexibility from the inherent risks.
The stable outlook reflects Fitch's expectation that leverage headroom will remain comfortable as a prudent approach to capex and R&D combined with proceeds from already announced or completed disposals in the financial year ending March 2021 (FY21) will support cash flow and counterbalance lower profitability stemming from the coronavirus pandemic.
"We believe Glenmark remains on track to address large debt maturities in 2021 over the next few months despite the withdrawal of its proposed US-dollar notes," said Fitch. "Nonetheless, failure to address debt maturities in line with our expectations will be credit negative."
