Fitch gives AmerisourceBergen bond A-

Fitch Ratings said it assigned an A- rating to AmerisourceBergen Corp.'s proposed $1 billion senior unsecured bond issuance.

Proceeds are expected to be used for the redemption of AmerisourceBergen's $500 million of unsecured bonds due September 2015 and for general corporate purposes, including the repurchase of stock.

The issuer default rating is A-, with a stable outlook.

Fitch views the incurrence of additional debt - albeit for the repurchase of stock - as tenable at the A- rating. The stock repurchase is meant to offset dilution associated with the pending warrant exercise by Walgreen Co. and Alliance Boots GmbH in 2016 and 2017.

The agency said it sees the relatively short three-year tenor of one tranche, and the firm's assertion that repurchased stock will be held for future re-issuance, as supportive of its dilution-offset intentions. Fitch's current forecasts yield cash generation sufficient over the ratings horizon to facilitate the repayment of the three-year tranche upon maturity in 2017.

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