Moody’s lowers GlaxoSmithKline view to negative

Moody’s Investors Service said it affirmed GlaxoSmithKline plc’s A2 long-term issuer rating and P-1 short-term rating and changed its outlook to negative from stable.

The outlook revision reflects that the company may not restore credit metrics in line with expectations during the next two or three years, Moody’s said.

The outlook revision also considers the deterioration in the company’s credit profile due to challenging market conditions in the U.S. respiratory market over the last 18 months, the agency said.

Material restructuring costs and the dilutive effect of the integration of the Novartis assets pose challenges to the restoration of the company’s credit metrics, Moody’s said.

While the decision to retain a significant part of disposal-proceeds is credit positive as it leaves the company with a stronger balance sheet through this transition period, this does not fully mitigate risks related to the pace of recovery towards credit metrics more in line with an A2 rating, the agency said.

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