S&P Global Ratings upgraded Mallinckrodt PLC's long-term issuer credit rating to CCC from SD following the specialty pharmaceutical company's recent debt exchange.

Mallinckrodt exchanged $706 million of various unsecured notes for $323 million worth of new 10% second-lien notes due 2025. This reduced overall debt principal by about $383 million.

The rating agency viewed the U.K.-based drugmaker's exchange offers as distressed exchanges, as the lenders were expected to receive a lesser amount than promised when the transaction closes.

Ratings said there is a higher probability of another distressed exchange by the company in 2020 as it has over $600 million of debt maturing in April 2020, plus risk from a possible settlement in the ongoing opioid litigation. The outlook on the ratings is therefore negative.

Ratings believes that even though Mallinckrodt continues to generate positive free cash flow, the company's ability to access the capital markets to refinance its maturing debt is limited due to the opioid liabilities.

The drugmaker's shares were up by almost 6.55% to $3.58 as of 11:55 a.m. ET on Dec. 12.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.