Moody's rates Merck notes A1

Moody's Investors Service said it assigned Merck & Co.'s $2 billion of senior notes due 2016 and 2021 A1 ratings and affirmed Merck's existing ratings, including the Aa3 long-term senior notes guaranteed by Merck Sharp & Dohme Corp., Prime-1 commercial paper and A1 senior revolving credit agreement ratings.

The outlook is stable.

Proceeds of the offering are expected to be used for general corporate purposes including the reduction of short-term borrowings.

The A1 rating on the new senior notes reflects their subordination to about $8.7 billion of existing senior debt at the subsidiary level and $7.1 billion of existing debt at the parent level that benefits from the subsidiary guarantee, Moody's said.

Merck's ratings reflect its solid scale in the global pharmaceutical market, its strong product and geographic diversity and a more favorable relationship between upcoming patent exposures and pipeline quality compared to many industry peers, the agency said.

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