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Fitch affirms Becton Dickinson's issuer default rating

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Fitch affirms Becton Dickinson's issuer default rating

Fitch Ratings affirmed Franklin Lakes, N.J.-based Becton Dickinson and Co.'s issuer default rating at BBB- with a stable outlook.

The rating agency said the rating is supported by the company's offering of value-based products and technologies that help improve treatment outcomes and restrain unnecessary costs. It added that Becton Dickinson's increased acquisitive posture has resulted in significantly higher debt leverage.

Fitch expects that, after the December 2017 Bard acquisition, Becton Dickinson will follow a deleveraging process similar to one taken after the purchase of CareFusion Corp. in 2015.

According to the agency, the company's total debt-to-EBITDA at March 31 was 4.0x, which can be reduced to below 3.5x, assuming a smooth integration.

Fitch noted that because a large portion of Becton Dickinson's sales come from consumable and disposable products it is less exposed to pricing headwinds that have affected sales of larger and more expensive capital equipment and implantable medical devices.

The rating agency expects Becton Dickinson's normalized annual free cash flow to be greater than $2 billion, which will help the company pay down sufficient debt to reduce leverage to below the 3.5x consistent with the BBB- rating.