S&P rates new Wyeth convertibles A

Standard & Poor's said it assigned its A senior unsecured debt rating to pharmaceutical maker Wyeth's proposed $2.5 billion of senior unsecured notes and to Wyeth's proposed offering of $850 million of convertible debentures due 2023.

S&P also affirmed its A long-term and A-1 short-term corporate credit ratings.

The outlook is negative.

Proceeds from the offerings will be used to repurchase the company's $1 billion in 7.9% senior notes due 2005, as well as redeem all of its outstanding $1 billion of 6.25% senior notes due 2006.

S&P said the still-strong investment-grade ratings on Wyeth reflect its solid position in the high-margin pharmaceutical business, given the company's relatively young and diverse drug portfolio and its strong capital structure. These factors are partially offset by the increased possibility of substantial additional charges for diet-drug litigation.

Wyeth's credit profile continues to include well-above-average business risk characteristics. This strength is derived from its drug portfolio, which is diverse and faces no major near-term patent expirations. The portfolio includes the antidepressant Effexor, the proton pump inhibitor Protonix, the pneumococcal vaccine Prevnar, and the anti-infective Zosyn.

S&P said accordingly, considering Wyeth's risk profile, the financial structure is expected to remain healthy, providing credit protection measures commensurate with the current rating. Funds from operations to net debt and net debt to EBITDA stand at 61% and 0.7x, respectively.

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