S&P affirms Siemens, off watch

Standard & Poor's said it removed from CreditWatch and affirmed its AA- long-term and A-1+ short-term corporate credit ratings on Siemens AG.

The outlook is negative.

The ratings had been placed on CreditWatch with negative implications on June 30, 2006, following the group's announcement of its acquisition of the diagnostics division of Bayer AG (BBB+/positive/A-2) for a purchase price of about €4.2 billion, the agency noted.

According to S&P, Siemens' credit protection measures are currently weak for the ratings, following acquisitions totaling more than €2.5 billion in the fiscal year 2005, the acquisition of Diagnostic Products Corporation for about €1.5 billion in 2006 and the merger of its carrier operations with the Networks Business Group of Finland-based mobile handset and infrastructure manufacturer Nokia Corp. (A/stable/A-1), with the requirement to equip the new joint venture with a €1 billion shareholder loan, shared equally with Nokia.

When comparing the current weak ratios with Siemens' financial targets, however, the growing importance of the financial services business should be kept in mind, S&P said.

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