Moody's lowers Walgreen

Moody's Investors Service said it downgraded Walgreen Co.'s senior unsecured rating to A3 from A2 and also downgraded its commercial paper rating to Prime-2 from Prime-1. The outlook is stable.

The agency said this rating action concludes the review for possible downgrade initiated on Jan. 5.

Moody's said the downgrade reflects its opinion that Walgreen's operating environment has become more risky as highlighted by its unresolved contract dispute with Express Scripts, the FTC approval of the Express Scripts/Medco merger and the potential for further tightening on reimbursement rates from government payers.

"We believe the unresolved contract dispute between Walgreen and Express Scripts creates more uncertainty regarding whether there will be an industry shift towards restricted pharmacy networks over time," said Maggie Taylor, a Moody's senior credit officer, in a news release.

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