FRANKFURT (Reuters) - Germany's Bayer AG (BAYG.DE: Quote, Profile, Research, Stock Buzz) wants to keep its single-A credit rating, CEO Werner Wenning said at the Reuters Chemicals Summit on Wednesday.
"We are strongly committed to our A rating," Wenning said, reiterating that the drugs and chemicals group did not see financial constraints standing in the way of it making acquisitions.
Ratings agency Standard & Poor's said in January that Bayer's debt protection measures continue to be below par for the single A rating, and that the ratings currently do not contain the flexibility for further debt-funded acquisitions.
Bayer holds an A3 rating from Moody's Investors Service and an A rating from Standard & Poor's, respectively the fourth and fifth lowest rungs in investment grade.
A number of European companies have recently abandoned ratings and debt targets as the lure of mergers and acquisitions builds, and with capital markets offering cheap financing.
NO NEW HYBRID PLANNED
Bayer issued a 1.3 billion euro hybrid bond last year, one of the biggest deals to date in this market. But despite the success of that issue, it does not plan to sell any further hybrids soon, Wenning said.
"We are extremely happy with our hybrid bond, but we are not going to issue another one for the time being," Wenning said.
Hybrid bonds, which blend features of equity and debt, are very long-dated, perpetual securities that allow borrowers to boost their balance sheet without diluting the holdings of existing shareholders, while paying investors higher returns than senior bonds.
The bonds are cheaper for companies to issue than equity and have been well received by yield-hungry investors keen on the premium they pay over senior debt. But they are still a relatively untested instrument.
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