Moody's affirms Eli Lilly, rates notes Aa3

Moody's Investors Service said it affirmed the ratings of Eli Lilly and Co. and assigned a rating of Aa3 to the new $1.5 billion senior unsecured notes due 2008 of Eli Lilly Services, Inc.

The outlook is stable.

Moody's said the Aa3 rating is based on the unconditional and irrevocable guarantee from Eli Lilly, rated Aa3. Following a $1.5 billion debt issuance in August 2005, this is the second debt issuance related to Eli Lilly's repatriation strategy under the American Jobs Creation Act of 2004.

Moody's said the affirmation of Eli Lilly's Aa3 ratings reflects good operating cash flow relative to debt, strong cash coverage of debt, low exposure to upcoming patent expirations, excellent execution from the pipeline in recent years, and a remaining late-stage product pipeline that is impressive.

Ratings affirmed include Eli Lilly's Aa3 rating for senior unsecured debt, medium-term notes, industrial revenue bonds and issuer rating as well as its Prime-1 commercial paper rating. Also affirmed were Eli Lilly Services Inc.'s Aa3 rating on its senior unsecured debt and the Aa3 rating for Lilly Savings Plan Master Trust C's senior unsecured debt.

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