PE Debt Watch (Upgrades & Downgrades)
As usual, we have a week’s worth of ratings actions on the debt of LBO-backed companies from the ratings agencies Standard & Poor's Ratings Services and Moody’s Investors Service. This week companies owned by GTCR, Silver Lake, TPG, and Oaktree Capital were downgraded. The debt on Berkshire Partners’ Bare Escentuals, which was recently acquired by Japanese personal care company Shiseido, was upgraded to ‘A’ to match its acquirer’s rating. Company: Graceway Pharmaceuticals Sponsor: GTCR Golder Rauner Action: Moody’s lowered the company’s corporate family rating to Caa3 from Caa1 and the probability of default rating to Caa3 from Caa1. S&P lowered the company’s corporate credit rating to 'B-' from 'B'. Highlight: From Moody’s: “Graceway's Caa3 corporate family rating reflects limited size and scale, significant product concentration risk, and high financial leverage relative to its anticipated earnings base.” From S&P: "The ratings on Graceway reflect the company's limited size, heavy reliance on one niche product, aggressive debt leverage, and looming debt maturities," said Standard & Poor's credit analyst Arthur Wong. These factors partly are offset by the company's currently adequate liquidity.
