S&P: Pfizer on negative watch with Allergan deal

Standard & Poor’s placed its AA corporate credit and senior unsecured long-term debt ratings on Pfizer Inc. on CreditWatch with negative implications. The short-term and commercial paper ratings remain at A-1+.

Pfizer’s proposed roughly $160 billion acquisition of specialty pharmaceutical company Allergan plc further strengthens Pfizer’s already excellent competitive position in the high-margin pharmaceutical industry, adding a number of strong products and pipeline prospects to the company's portfolio, S&P said in a news release.

The company will initially fund the acquisition with equity, the agency said.

While share repurchases will likely be funded with ongoing free cash flows and on-hand cash and investments, net debt leverage at Pfizer may increase over the next several years, the agency said.

Depending on the size and pace of the share repurchases, the deterioration in credit measures could put pressure on the AA ratings.

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