S&P rates new Genzyme convertibles BBB

Standard & Poor's said it assigned a BBB senior unsecured debt rating to Genzyme Corp.'s $600 million convertible senior unsecured notes and affirmed its BBB corporate credit and senior unsecured debt ratings.

The outlook is stable.

Proceeds from the convertible senior notes will be used to repay the roughly $300 million outstanding under the company's credit facility as well as further build liquidity.

S&P said the investment-grade ratings on Genzyme reflect the biopharmaceutical company's continued strong operating performance, moderate financial policies, and the promise of increased diversification in its product portfolio, factors offset somewhat by the company's still-heavy reliance on its flagship product, Cerezyme.

Genzyme maintains a level of liquidity that is consistent with its investment-grade rating. As of Sept. 30, the company had $870 million in cash and investments. Funds from operations for the 12 months ended Sept. 30 was $415 million, which should continue to grow given the solid sales growth prospects of Genzyme's product portfolio.

Following the repayment of the $300 million outstanding under the credit facility, Genzyme does not face any significant near-term debt maturities. The outstanding $575 million in 3% convertible subordinated debentures are not due until May 2021, though there is a cash put on the notes as early as May 20, 2004.

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