S&P rates Merck notes BBB+

S&P said it assigned a BBB+ rating to the two tranches of hybrid notes that will be issued by Merck KGaA.

The proceeds will be used to partially finance the acquisition of Versum, S&P said.

The subordinated notes mature in June 2079 and are fixed until the first reset date, the agency said.

S&P said it expects the amount of issued hybrid notes will not exceed 15% of the group's capitalization in the next five years.

The two-notch difference between the BBB+ rating on the proposed hybrid notes and A issuer credit rating on Merck reflects one notch for the subordination and an additional notch for the optional deferability of interest, the agency said.

The notching of the proposed securities takes into account a view that there is a relatively low likelihood that Merck will defer interest payments, S&P said.

Should that view change, the agency said it may significantly increase the number of downward notches applied to the issue rating.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.