S&P: sanofi-aventis on watch

Standard & Poor's said the AA-/A-1+ long- and short-term corporate credit ratings on sanofi-aventis SA remain on CreditWatch, where they were placed with negative implications on Sept. 7.

"The CreditWatch continues to reflect our opinion that this fully debt-funded transaction is likely to go along with a weaker financial policy," S&P analyst Olaf Toelke said in a statement.

"We believe this could lead to a marked deterioration of sanofi-aventis' financial metrics, which could fall below levels we view commensurate with the present ratings. This could occur, for example, if the pension-adjusted ratio of funds from operations to net debt were to fall to significantly less than the 60% threshold for the rating."

Ratings reflect sanofi-aventis' excellent business risk profile, which is unaffected by the proposed transaction, and its modest financial risk profile, the agency said.

Ratings are supported by the group's position as one of the world's leading ethical pharmaceuticals companies, the agency added.

Ratings also reflect the group's significant therapeutic and product diversity, underpinned by a product portfolio comprising eight blockbuster drugs, strong operating profitability and free cash flow generation, the agency noted.

Any negative rating action will likely be limited to one notch, the agency said.

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