MUMBAI (Thomson Financial) - Standard & Poor's Ratings Services said it has
lowered its long-term corporate credit rating on Switzerland-based
pharmaceuticals group Novartis AG. to 'AA-' from 'AAA' due to the group's
unexpected change in financial policy.
S&P affirmed the company's 'A-1+' short-term corporate credit rating and
said the outlook is stable.
Novartis' lack of commitment to the former 'AAA' rating is demonstrated by
its announcement to debt-finance the acquisition of a 77 percent stake in United
States-based eye care company Alcon Inc., which is owned by Switzerland-based
food manufacturer Nestle S.A., for about $39 billion, leading to significantly
increased leverage, S&P said.
The rating action reflects that debt protection ratios will be significantly
diluted for at least the next five years, because the transaction is to be fully
debt financed, and that this action is a marked deviation from the group's
former conservative financial policy, the rating agency said.
TFN.newsdesk@thomson.com
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