Moody's rates Pfizer notes Aaa

Moody's Investors Service said it affirmed the Aaa/Prime-1 ratings of Pfizer Inc. and assigned Aaa ratings to Pfizer's two tranches of new yen-denominated senior unsecured fixed-rate notes due 2011 and 2016 totaling roughly ¥100 billion.

The outlook remains negative.

Proceeds from the note offering will go toward general corporate purposes, including repayment of a $750 million bond maturing in February.

Pfizer's recent announcement that it is exploring strategic alternatives for Pfizer Consumer Health does not have any immediate implications for the rating or the outlook. However, Moody's said it believes that, in a scenario where the company is sold or spun-off, Pfizer's reduced revenue diversity and lower free cash flow could place incremental pressure on the rating.

The affirmation of Pfizer's Aaa ratings reflects the company's excellent credit profile, impressive scale and market positions, high profit margins and return, strong cash coverage of debt, strong product pipeline and low exposure to legal contingencies relative to its equity base, the agency said.

Nonetheless, the negative outlook reflects Pfizer's recent dividend increase, which Moody's said will erode the ratio of free cash flow to debt (currently 40%). In addition, the company's exposure to patent expirations over the next three years contributes to a higher level of operating risk than other Aaa-rated pharmaceutical companies.

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