Moody's affirms Merck, ups Schering-Plough

Moody's Investors Service said it affirmed Merck & Co., Inc.'s Aa3 long-term rating and Prime-1 short-term rating and upgraded Schering-Plough Corp.'s long-term senior unsecured rating to Aa3 from Baa1, concluding a review for upgrade that began on March 9.

The outlook is stable.

The actions follow the closing of the merger between Merck and Schering-Plough and the implementation of cross-guarantees on debt instruments, according to the agency.

"Moody's is stabilizing Merck's rating outlook based on improved liquidity, solid operating performance of both Merck and Schering-Plough during 2009, and reduced exposure to patent challenges," Michael Levesque, Moody's senior vice president, said in a statement.

The affirmation of Merck's Aa3 ratings reflects the sound strategic rationale for Schering-Plough transaction, solid post-merger credit metrics and good prospects to deleverage using free cash flow, the agency said.

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