S&P cuts Baxter International ratings

Standard & Poor's said it lowered its corporate credit and senior unsecured debt ratings on Baxter International Inc. to A- from A and lowered the company's short-term commercial paper rating to A-2 from A-1.

The outlook remains negative.

The downgrade follows a series of downward revisions to Baxter's earnings forecasts, most recently on Dec. 22.

S&P said that despite the underlying strength of Baxter's business lines, the earnings revisions raise S&P's concerns about Baxter management's ability to consistently judge the competitive landscape for important core product lines, such as plasma-derived products and hemophilia treatments, and to invest productively in its business.

In addition, it is still unclear to what extent restructuring and divestiture initiatives undertaken in 2002 and 2003 will restore profitability to the underperforming plasma and renal lines.

S&P added that the investment-grade ratings of Deerfield, Ill.-based Baxter International Inc. reflect the company's operating strength as a leading diversified medical products manufacturer with relatively non-cyclical and entrenched primary product lines that generate strong cash flow.

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