Moody’s puts Bayer on downgrade review

Moody’s Investors Service said it placed Bayer AG’s A3 senior unsecured notes rating under review for downgrade, along with the ratings on its guaranteed subsidiaries.

The agency also placed on downgrade review the Baa2 rating on Bayer Corp.’s hybrid notes.

The review was triggered by news that Bayer will acquire Monsanto Co. for a $122 per share all-cash offer valued at $62 billion, Moody’s said.

The agency said it believes that the acquisition is underpinned by a sound strategic rationale, reflecting the high complimentary crop science portfolios of both companies, as well as the robust long-term fundamentals enjoyed by the sector.

But Moody’s also said it believes the deal signals a change in Bayer’s financial policy and an increase in its financial leverage with total debt-to-EBITDA likely to rise to about 4.5x.

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