Moody's downgrades Merck

Moody's Investors Service said it downgraded Merck & Co., Inc.'s senior notes and bonds guaranteed by Merck Sharp & Dohme Corp. to A1 from Aa3 and its senior notes, bonds and revolving credit facility not guaranteed by Merck Sharp & Dohme to A2 from A1. This concludes a review for downgrade begun on May 1, and the outlook is stable.

"Merck's credit ratios will steadily weaken but remain solid as the company executes a $15 billion share repurchase program over the next several years," Michael Levesque, Moody's senior vice president, said in an agency news release. The decision to perform debt-financed share repurchases altered Moody's view of Merck's previously conservative financial policies.

The agency said Merck's A1 rating reflects the company's strong competitive position in the global pharmaceutical industry, its strong product diversity, its high profitability and its strong cash flow.

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