Fitch affirms GlaxoSmithKline

Fitch Ratings said it affirmed GlaxoSmithKline plc's AA senior unsecured debt and F1+ short-term debt ratings.

The outlook is stable.

The ratings reflect GlaxoSmithKline's excellent market position as the global No. 2 pharmaceuticals company, its successful research and development activities as evidenced by its good product portfolio and full pipeline, its impressive geographical and product diversification and its high EBITDA margin of 35% at the end of fiscal year 2004, the agency said.

Conversely, the ratings are constrained by GlaxoSmithKline's statement that it considers its net debt position to be low relative to its market cap. This, according to the company, allows it to take advantage of any opportunities that may arise to build the business.

The ratings are also constrained by potential tax payments to the Internal Revenue Service, which is claiming $4.6 billion and related interest costs of $3.6 billion. GlaxoSmithKline has a counter-claim against the IRS for repayment of taxes totaling $1.8 billion, the agency said.

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