May 3, 2016 / 6:32 PM / 2 years ago

Moody's stands by Valeant rating on CEO Papa's first day

May 3 (Reuters) - Moody’s Investors Service maintained some of its ratings on beleagured company Valeant Pharmaceuticals International Inc after the drugmaker filed its long-delayed annual report on Friday.

The Laval, Quebec-based company’s U.S.-listed stock rose 14 percent to $37.52 in afternoon trading.

Joseph Papa, a drug-industry veteran and former Perrigo Co Plc CEO, was named Valeant’s new chief executive in late April replacing Michael Pearson. Tuesday was Papa’s first day in office at Valeant.

The company has been struggling with heavy scrutiny from the U.S. Congress, prosecutors, and regulators over its drug pricing and accounting practices.

On Friday, Valeant filed its annual report that met an important deadline for creditors, and announced changes to its board.

The annual filing significantly reduced the potential for debt acceleration, resulting in an upgrade of probability of default rating to 'B2-PD' from 'Caa1-PD', Moody's said in a report on Tuesday. (

The report also noted the challenge of generating sustainable earnings growth in the absence of large acquisitions left the drugmaker with a negative rating outlook.

Ratings agency Standard & Poor’s had downgraded Valeant’s corporate credit rating last month.

S&P on Tuesday also revised the CreditWatch implications on its ‘B’ corporate credit rating and ‘BB-‘ secured debt rating on Valeant to positive from developing.

In a report on Tuesday, S&P said the CEO and board change was incrementally positive for Valeant’s reputation, but they expect the company will face continued legal and regulatory headwinds. (Reporting by Natalie Grover in Bengaluru; Editing by Shounak Dasgupta)

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