Fitch Revises Boston Scientific's Outlook to Stable; Affirms 'BB+' IDR

CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed the Issuer Default Rating (IDR) and outstanding debt ratings on Boston Scientific Corp (NYSE: BSX) as follows.

--IDR at 'BB+';

--Senior unsecured notes at 'BB+';

--Unsecured bank credit facility at 'BB+'.

Fitch has also revised the Rating Outlook to Stable from Negative.

The Outlook revision is supported by the progress BSX is making towards stabilizing its drug-eluting stent (DES) and cardiac rhythm management (CRM) businesses, while paying down debt in the process. During the last three quarters, leverage (TD/EBITDA) has decreased to 3.30 times (x) for latest twelve months (LTM), ending March 31, 2008 from 4.24x LTM ended June 30, 2007, owing to margin improvement and debt reduction. Fitch expects BSX's leverage will decline further in the intermediate-term through increased cash flow growth and debt reduction. For BSX to retain a Stable Outlook, continued progress needs to be made on shoring up the CRM and DES businesses, combined with continued improvement of cash flow generation and leverage reduction.

Despite the CRM and DES challenges, BSX's other businesses have been performing well. Nevertheless, the dynamics of the DES and CRM businesses bear close monitoring. BSX continues address an FDA warning letter that is delaying the U.S. launch of Taxus Liberte (Liberte) and other devices. Liberte is an important product, as it will help BSX to compete with the recent U.S. launch of a Medtronic's DES (Endeavor) and the expected U.S. launch of an Abbott Laboratories' DES (Xience), which BSX will co-market. Liberte is currently marketed.

Free Cash Flow (Net Cash Flow From Operations Less Capital Expenditures) for LTM ending March 31, 2008 was $935 million. Interest coverage (EBITDA/Interest) was 4.2x and leverage (Total Debt/EBITDA) was 3.3x for LTM ending March 31, 2008. BSX has approximately $1.7 billion in cash/short-term investments and $7.6 billion in debt. BSX has approximately $5.4 billion in debt maturing through 2011, with $1.3 billion maturing in 2010 and $3.8 billion maturing in 2011. At March 31, 2008, BSX had full availability on its $2 billion revolver, maturing on April 21, 2011.

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