S&P Upgrades Jazz Pharmaceuticals Debt on Stronger Recovery View

S&P Global Ratings on Tuesday raised the issue-level rating on Jazz Pharmaceuticals PLC's senior secured debt to 'BB+' from 'BB' and assigned a 'BB+' rating to Jazz Financing Lux S.a.r.l.'s proposed $1.9 billion term loan. The recovery rating was revised to '2' from '3', implying an expected substantial recovery of 70%-90% in the event of a payment default. The proposed financing is leverage-neutral and extends the maturity to 2033 from 2028.

The upgrade to the secured debt reflects a higher valuation and S&P's view that the company's unsecured debt provides a more meaningful cushion to secured debt holders than previously factored into its analysis. Jazz recently issued $1.25 billion of 1.875% exchangeable senior notes due 2032 and plans to use the net proceeds mainly for general corporate purposes while repurchasing about $225 million of shares. That issuance followed the repayment of its $1 billion exchangeable senior notes in June 2026.

S&P kept its 'BB' issuer credit rating and stable outlook, reflecting expectations that Jazz will continue to boost revenue and generate strong adjusted free operating cash flow of at least $1.5 billion annually. Jazz reported second-quarter 2026 revenue of $1.2 billion, up 16% year over year, driven by broad-based strength across its sleep, epilepsy, and oncology franchises. In August 2026, Jazz disclosed FDA approval of Ziihera (zanidatamab) for first-line HER2-positive gastroesophageal adenocarcinoma.

Jazz achieved leverage of 1.8x in 2025, offering substantial headroom against the 3x-4x range S&P views as consistent with the rating. In August 2026, Jazz announced the acquisition of Actio for $820 million upfront plus up to $500 million in contingent milestone payments, gaining ABS-1230, a late-stage rare epilepsy asset. The transaction, expected to close by the fourth quarter, will be funded through a combination of cash on hand and draws on existing financing facilities.

S&P assumes about $2 billion in annual acquisition spending given Jazz's small scale, above-average product concentration, and expansion ambitions. The firm considers outsized M&A, such as the $7 billion acquisition of Epidiolex in 2021, as the greatest downside risk to the rating. The capital structure consists of an $885 million secured revolving credit facility due in 2033, the new proposed $1.9 billion secured term loan due in 2028, $1.5 billion of senior secured notes, and $2.25 billion of unsecured exchangeable notes.

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