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Investing.com -- S&P Global Ratings has upgraded the issuer credit rating for Bausch + Lomb Corp. (B+L) from ’B-’ to ’B’. This decision mirrors a similar action taken on the same day for its parent company, Bausch Health Cos. Inc. (Bausch Health).
The rating for B+L is capped at one notch above Bausch Health, as B+L is considered a partially insulated subsidiary of its relatively weaker parent company. Despite the upgrade, the stand-alone credit profile for B+L remains at ’bb’.
The rating for B+L’s senior secured credit facility has also been raised from ’B-’ to ’B’, while the recovery rating on the debt remains at ’3’.
The developing outlook reflects the potential for a downgrade of parent company Bausch Health, which currently holds a negative outlook. However, there is also potential for a higher rating if Bausch Health decides to sell its remaining ownership. This could result in B+L’s rating no longer being linked to that of the parent company.
The ’B’ issuer credit rating of B+L is capped by the rating on Bausch Health. The expectation is that the remaining ownership could eventually be separated from Bausch Health. If this separation occurs, the rating may no longer be tied to the parent, and the rating could be raised in line with B+L’s stand-alone credit profile of ’bb’.
The outlook on B+L is currently developing. The issuer credit rating on the company is capped at the higher of ’B-’ and one notch above the issuer credit rating on its parent, Bausch Health. This is due to the belief that B+L’s stand-alone credit profile is stronger than that of its parent.
Over the next 12 months, the rating could be lowered if the rating on Bausch Health is downgraded. Alternatively, the rating could be raised if B+L is separated from Bausch Health, given the belief that B+L’s stand-alone credit profile is stronger than that of its parent.
The rating on B+L could be lowered if the rating on parent company Bausch Health is downgraded. However, the rating on B+L could be raised within the next 12 months if Bausch Health sells its ownership stake in B+L. This could mean the rating would no longer be tied to that of Bausch Health and would be raised in line with B+L’s stand-alone credit profile.
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