Bausch Health Sounds Out Investor Interest in HY Bond Offering to Address Maturities; Creditor Co-Op Could Complicate Refi Effort

Pharmaceutical company Bausch Health is sounding out investors on a potential new high-yield bond offering this week at JPMorgan’s leveraged finance conference, to address nearer-term maturities including senior secured notes due in 2027, according to sources.

Bausch Health is working with JPMorgan as banker, and a bond offering could launch as early as next week, sources said; the size and structure are still being negotiated.

The size of the bond deal could be $2 billion to $5 billion, according to sources. At the larger end, the company could pursue a refinancing of over $4 billion of debt maturing in 2027, as well as pay down the recently launched $700 million credit facility. On a recent call, Bausch’s management indicated it would be looking to replace the $700 million credit facility and set up a permanent structure to address 2027 maturities.

Bausch’s maturities profile, taken from the company’s recent fourth-quarter presentation, is below:

A high-yield bond investor who attended a meeting with Bausch Health said the bond would likely be on the smaller end, about $2 billion to $3 billion in size, with a maturity no shorter than five years. Additionally, the investor noted that the bond’s pricing is likely to come in the high single digits or low-double-digit yield range. The current long dated-secured debt is trading in the low-double-digit range.

Another investor who spoke with Bausch at JPMorgan’s conference noted that the company is laying out a strategy to be 4x levered with $8 billion in debt by 2028 through a combination of asset sales and free cash flow. That path would be complicated, as Bausch will lose its patent on Xifaxan in 2028; Xifaxan accounts for roughly half of the company’s EBITDA.

But a cooperation agreement that covers the entire capital structure may complicate the company’s refi efforts. Existing creditors who are parties to the co-op may be prohibited from subscribing to the new deal and get allocated new paper issued by Bausch Health, according to sources. The creditor cooperation agreement in Bausch Health may incentivize the pharmaceutical company to pursue a comprehensive restructuring, including a potential chapter 11, while dimming the prospect of a full Bausch & Lomb spinoff, as reported.

Bausch Health recently swapped out its previous advisors White & Case and Houlihan Lokey and brought on Prodkauer Rose and Evercore. The move indicates the company’s frustration with a lack of progress regarding a capital structure solution, as well as with the perception that its only chance at a recapitalization is through a chapter 11 filing, according to sources and a press report.

Nevertheless, Bausch Health said in its recent earnings call that it is “exploring accessing the capital markets” in the first half of 2025, according to a press release. The company recently disclosed that its $700 million senior secured credit facility is expected to be backed by a portion of the Bausch + Lomb shares owned by the company and would be available for drawing by Bausch Health for seven months, with a maturity 364 days from the date of borrowing. Octus’ earnings analysis of Bausch Health can be found HERE.

Bausch Health’s capital structure is provided below:

Bausch Health’s 2027 term loan was last trading on Feb. 26 at 99.25/99.75, according to Solve.

A list of Bausch Health’s CLO Holders can be found in Octus’ CLO Database HERE.

JPMorgan and Bausch Health did not respond to requests for comment.