S&P Global upgrades Biocon Biologics credit rating To 'BB+'

Mumbai: Biocon Biologics, a subsidiary of Biocon Ltd, on Wednesday said that S&P Global Ratings has upgraded the company's long-term issuer credit rating to 'BB+' from 'BB' and revised the outlook to "stable". The rating on the senior secured notes issued by Biocon Biologics Global PLC has also been upgraded to 'BB+'.

The development follows Biocon's recent equity issuance to settle compulsorily convertible preference shares (CCPS) issued to Viatris Inc.

The rationale provided by the global ratings agency for the rating action was that Biocon has simplified its capital structure. The company reduced its outstanding structured debt liabilities, and a $1 billion CCPS issued to Viatris has now been removed through a mix of equity share swaps and cash consideration. Biocon funded the cash payout through fresh equity of about $460 million that it raised earlier this month.


It also noted that new product launches and favourable industry trends will support Biocon's earnings. Biocon's financial policy underpins its credit strength, the biosimilars company said in a press statement. Biocon's management remains committed to reverting its balance sheet position to levels before its acquisition of Viatris' biosimilars portfolio, it said.

In November 2022, Biocon acquired Viatris' biosimilar business for $3.3 billion. The transaction pushed up the group's debt-to-EBITDA ratio to about 7x in fiscal 2024 from about 2x in fiscal 2022.

S&P said that the stable outlook reflects its view that Biocon's earnings will grow steadily over the next 12-24 months on the back of growing demand for generics and biosimilars in key international markets and new product launches, which will help the company to maintain its improved financial position.