Moody’s downgrades Grifols credit rating despite sale of Shanghai Ras

Moody’s downgraded Grifols’ credit rating, according to a rating the agency published this Wednesday. As a result, the pharmaceutical company dropped to a lower level than before, moving from level B2 to B3. In any case, its debt was already classified as speculative.

The ratings firm put Grifols under review in March and this Wednesday confirmed it was downgrading its rating. Even Grifols’ sale of 20% of Shanghai Raas to Haier did not escape Moody’s cut. “The downgrade to B3 reflects the company’s still high level of leverage, even taking into account the decline resulting from recent asset sales and the lower-than-expected recovery in its cash flow,” the report explained.

But this is not the only risk that the rating agency sees, which is also cited as one of the reasons for the downgrade. poor management of the company and its opaque structure. Moody’s said there are concerns about the drug company’s financial performance, its risk management or its transactions among its various companies. It also calls into question the company’s recent leadership change.

In February, the Spanish firm submitted its annual accounts without the auditor’s seal. On the other hand, Nacho Abia took over as CEO three months ago in the company’s attempt to calm the crisis caused by a bearish Gotham City Research report in January.

Moody’s also explains that while the firm has issued debt and will thus be able to pay off its obligations, in addition to the sale of Shanghai Raas, Your liquidity is guaranteed for the next 12 months only. “After this period, maintaining adequate liquidity will depend on a return to positive cash generation, which has not yet occurred,” the note said, adding that Grifols will achieve this not this year, but in 2025.

In late April, Grifols raised $1 billion in a guaranteed debt offering. The company’s debt outlook is stable as the rating agency expects the Spanish company’s earnings and free cash flow to recover over the next 12 to 18 months.