S&P rates Bayer convertibles BBB

S&P said it assigned its high equity content and BBB issue rating to Bayer AG's €4 billion mandatory convertible notes (MCB) due Nov. 22, 2019.

The notes are issued by Bayer Capital Corp. BV, a group finance subsidiary, and guaranteed by Bayer (A-/negative watch/A-2).

Proceeds will serve to fund the proposed acquisition of Monsanto Co.

The CreditWatch negative placement on the notes mirrors the agency’s CreditWatch on Bayer AG.

The BBB issue rating reflects a two-notch downward adjustment from the A- corporate credit rating on Bayer. S&P said this reflects that the MCBs are deeply subordinated and the fact that the corporate credit rating of the guarantor Bayer AG, and should remain, investment-grade after the acquisition of Monsanto, under the agency’s current base-case scenario.

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