Grifols shares fell more than 12% after Moody’s downgraded its credit rating.

Grifols’ credit rating downgrade by Moody’s has not gone down well with investors. Shares in the Catalan blood multinational fell more than 12% yesterday, to €7.97. All this comes after Moody’s decided on Wednesday to lower the company’s corporate family rating (CFR, by its initials in English) to B3 from B2, with a “stable” outlook. The company confirmed in a statement that with this measure “the downgrade review initiated on March 5, 2024 ends”.

This contrasts with another agency, Fitch, which on the same day revised Grifols’ outlook from negative to “stable” and reiterated its B+ rating, albeit with warnings about future developments. Creditor banks have also blocked the refinancing of Scranton, the company in which the Grifols family is based, although industry sources confirmed that “negotiations to find a solution are ongoing.”

The company, which held its general assembly two weeks ago, received the support of the majority of its shareholders in its strategy to confront the attacks promoted since last January by the Gotham City bear fund.

The downgrade from Moody’s reflects Grifols’ higher leverage, even taking into account the expected debt reduction from its recent asset sale, and a slower-than-expected free cash flow (FCF) recovery, which will result in credit metrics that will be more hefty. In line with a B3 rating over the next 12 to 18 months. Last week, the company closed the sale of 20% of its Chinese subsidiary, Shanghai Ras, to Haier for about $1.6 billion. It also restructured debt maturities.

“Governance considerations have also been a key factor in the actions we are taking today, particularly the company’s limited ability to predict financial performance and manage risk, with a track record of poor performance, its complex and opaque organisational structure and its related party transactions as well as management turnover,” he says.

Moody’s expects the company to use the proceeds from the sale of its 20% stake in Shanghai RAAS “to reduce its existing senior secured debt on a pro rata basis, including the repayment of approximately €520 million of its outstanding €838 million senior notes.” Notes due February 2025.