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UPDATE 1-Fitch cuts Pfizer rating; S&P, Moody's may cut
January 26, 2009 / 10:24 PM / 9 years ago

UPDATE 1-Fitch cuts Pfizer rating; S&P, Moody's may cut

(Adds action by Fitch Ratings and Moody’s Investors Service)

NEW YORK, Jan 26 (Reuters) - Fitch Ratings cut its ratings on Pfizer Inc (PFE.N) on Monday and Standard & Poor’s and Moody’s Investors Service said they may cut them after the No. 1 drugmaker announced plans to buy Wyeth for $68 billion.

Pfizer said it secured $22.5 billion in funding from a consortium of banks to help pay for the deal. For details, see [ID:nN26367941]

S&P said it may lower Pfizer to the “AA” category, the third-highest investment grade, from the top “AAA” if the deal is completed as planned.

Pfizer is one of only six companies the rating agency currently rates “AAA.”

Moody’s also said it may cut the company to “A1,” the fifth- highest investment grade, from “Aa1,” the second-highest investment grade.

“The rating review is focusing on Pfizer’s tolerance for significantly higher debt levels than those contemplated in the current Aa1 rating,” Moody’s said in a statement.

Fitch Ratings cut Pfizer one notch to “AA,” the third-highest investment grade, and said it may cut them again.

“The incremental debt will immediately pressure Pfizer’s credit profile upon the consummation of the transaction,” Fitch said.

The acquisition -- the third-largest in the drug industry since 1998 -- would help Pfizer cope with a major gap in revenue in 2011, when its blockbuster Lipitor cholesterol treatment will begin to face U.S. generic competition.

However, the deal “would only modestly reduce the proportion of revenues exposed to generic competition through 2011,” S&P said. “In our view, Pfizer may need to take other actions to mitigate the expected revenue and earnings losses.” (Reporting by Karen Brettell and Walden Siew; Editing by Dan Grebler)

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