Boston Scientific Corp. (NYSE: BSX) wasted no time in looking to capitalize on its escape from the junkyard, at least in the eyes of one rating agency.
Standard & Poor’s Ratings Services raised BSX’s credit rating out of junk bond status, freeing BSX up to raise some cash in an effort to pay down a massive chunk of debt that comes due in April, 2011.
To that end the company put out a bond prospectus, seeking to raise $2 billion through the sale of senior unsecured notes.
The public offering will consist of $850 million in 4.5 percent notes due January 2015, $850 million in 6.00 percent notes due January 2020 and $300 million in 7.375 percent notes due January 2040. It expects the round to close on December 14. BSX will land net proceeds of $1.99 billion, before expenses, according to a regulatory filing.
“We expect to use the net proceeds from this offering for general corporate purposes, including prepaying a portion of our bank term loan due in April 2011,” the company wrote in a prospectus filed with the federal Securities and Exchange Commission.
Another credit agency, Fitch Ratings, tagged the bond offering with a BB+ rating and a “positive” outlook, citing the roughly $744 million in debt Boston Scientific paid off during the last four quarters.
“Fitch expects additional declines to BSX’s leverage in the intermediate term through increased profitability and additional debt reduction,” according to a press release.
But BSX is still looking at a substantial amount of debt, with $100 million worth coming due in 2010, another $3.75 billion due in 2011 and $2.2 billion maturing after 2013. Fitch predicted the company will continue to pay down the 2011 nut and refinance the remainder. Unlike Standard & Poor’s, however, Fitch kept its credit rating for the company as a whole at just under investment grade (meaning at least one company thinks BSX still belongs in the junkyard).*
Back in March, Standard & Poor’s raised BSX to BB+, just below investment grade. The move followed a similar upgrade by Moody’s Investors Service earlier that month; Fitch followed suit in May.
As a result of prep-paying a portion of the loan, BSX said it expects to record a pre-tax charge of approximately $30 million during the fourth quarter.