Moody’s assigns Baa3 to Merck notes

Moody's Investors Service said it assigned a provisional Baa3 rating to the proposed issuance of new junior subordinated fixed- to reset-rate notes to be issued by Merck KGaA.

Proceeds will be used to fund a portion of the acquisition of Sigma-Aldrich Corp.

The provisional Baa3 rating is contingent upon a better visibility into a successful closing of the pending acquisition. Merck KGaA expects the acquisition to close by the end of the first half of 2015.

Merck's existing A3 senior unsecured rating remains under review for downgrade. However, Moody's anticipates that, at the time of a better visibility into a successful closing of the pending acquisition, Merck's senior unsecured ratings will be downgraded to Baa1, the short-term rating will remain at P-2 and the outlook will be negative.

In addition, the rating on the proposed notes offering will be converted to Baa3 from provisional Baa3 subject to a successful issuance, the agency said.

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