S&P cuts Bayer, Schering

Standard & Poor's said it lowered its long- and short-term corporate credit ratings on Bayer AG to BBB+/A-2 from A/A-1 due to its significantly increased leverage following the acquisition of Schering AG.

The ratings were removed from CreditWatch, where they were placed on March 24, the agency added.

At the same time, the long- and short-term corporate credit ratings on Schering were lowered to BBB+/A-2 from A/A-1, equalizing them with the ratings on Bayer, owing to Bayer's €17 billion commitment to Schering, S&P added.

The agency said that the ratings on Bayer continue to be supported by its significant business diversity, based on its excellent market positions in crop science, material science, diagnostics and over-the-counter self-medication drugs.

The ratings are constrained by the group's weak debt-protection measures, due to the acquisition of Schering, which will be 30% financed by disposals, 20% by equity and 50% by cash and debt, according to S&P.

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