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Fitch affirms Allergan's ratings; outlook revised to positive

Fitch Ratings affirmed Allergan plc's ratings at BBB- and revised the outlook to positive from stable.

The rating agency said the positive outlook reflects the Botox-maker's strengthening credit metrics. Assuming generic competition for Allergan's eye drug Restasis becomes available in the market before 2019 ends, Fitch expects the company to operate with debt/EBITDA at or below 3.0x beginning 2020.

In addition, Fitch anticipates the Dublin-based pharmaceutical company will remain an active buyer in the M&A field with its steady free cash flow and existing cash balances available to buy targeted growth-oriented assets. The rating agency noted that Allergan's deals will be generally smaller compared to its earlier transactions and will be funded with internally generated liquidity to support a more stable debt leverage profile.

Fitch projects low- to mid-single-digit organic sales growth for Allergan during 2019 to 2020, excluding the negative impact of generic Restasis competition.